Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair

Oral Answers to Questions — TRANSPORT

Material Damage (Insurance)

Mr. McCrindle: asked the Minister of Transport if he plans to introduce legislation amending the Road Traffic Acts and requiring insurance against material damage to be effected.

The Minister of Transport (Mr. Norman Fowler): I have no such plans at present.

Mr. McCrindle: Is it not unfortunate that a motorist can cause material damage either to another vehicle or to propperty and, by failing to involve his insurer, make certain that there can be no redress for the victim other than through the courts—and that often against a man of straw? Does my right hon. Friend agree that there is a case for extending the requirement of the Road Traffic Acts to include not only personal injury but damage to property? Are we not bound to do that under a 1972 EEC directive?

Mr. Fowler: It is true that most Common Market countries have that requirement. That is not necessarily conclusive, but I shall certainly examine the situation.

British Railways Board

Mr. Bagier: asked the Minister of Transport when he expects to meet the chairman of the British Railways Board.

Mr. Beith: asked the Minister of Transport when he expects to meet the chairman of the British Railways Board.

Mr. Straw: asked the Minister of Transport when he next intends to meet

the chairman of the British Railways Board.

Mr. Fowler: Soon.

Mr. Bagier: When the Minister meets the chairman, will he assure him that he does not want to see any more Beeching-type cuts? Will he also assure him that there will be necessary investment in rolling stock for rural transport and cross-country routes such as the Newcastle—Sunderland—Middlesbrough route? Does he agree that unless there is such an assurance there will be Beeching-type cuts as a result of the complete breakdown of available stock?

Mr. Fowler: I take the hon. Gentleman's point. Investment levels are under review. I repeat what I have said before: I have no intention whatsoever of presiding over a fresh round of Beeching-type cuts on the railways.

Mr. Beith: Will the Minister discuss with the chairman of British Rail the bad recent punctuality record on the East Coast main line which has affected passengers and the delivery of national newspapers in the North of England? Is he aware that British Rail attributes this not to the problems of the Penmanshiel tunnel but to there not being enough locomotives? Will he consider the investment implications of that?

Mr. Fowler: There have been problems involving that tunnel. I shall discuss the matter raised by the hon. Gentleman with the chairman of British Rail.

Mr. Straw: Will the Minister also discuss with Sir Peter Parker the appalling state of the diesel units used on the Preston-Blackburn and Colne-Blackburn-Manchester lines, many of which are more than 20 years old? When will those units be replaced?

Mr. Fowler: The board is aware of the unsatisfactory condition of some of its fleet of DMUs and is considering making replacements. Some replacements should be complete by the end of the year. I am ready to give urgent consideration to any proposals by the board for a programme of construction.

Mr. Alan Clark: Does the Minister agree that the chairman of British Rail's vanity is not matched by his competence?

Mr. Russell Kerr: That is not saying a lot.

Mr. Clark: Will the Minister suggest to the chairman, as a publicity gimmick of the type on which he is keen, that he might personally wash one compartment?

Mr. Fowler: I am not sure who my hon. Friend was getting at in the last part of his question. I shall draw my hon. Friend's remarks to the chairman's attention. It is common ground that the current chairman, Sir Peter Parker, has made and is making an outstanding contribution.

Mr. Anderson: Has the Minister noted in the recent package from President Carter in response to the energy crisis a new emphasis on public transport in the United States? When the Minister discusses this matter with the chairman of British Rail, will he be prepared to say that he will devote the resources necessary to electrification and to the increasing use of rural lines and pricing policy to ensure that Britain also comes to terms with the energy crisis?

Mr. Fowler: I noted what President Carter said. It is clear that the United Kingdom will have to take on board some of the matters to which the hon. Gentleman has referred. However, our public transport provision is infinitely better than that in the United States.

Mr. Trippier: I appreciate that lighting is essential at the junctions of bypasses and on slip roads to motorways, but does my right hon. Friend agree that the further installation of light standards along the full length of the M62 and M66 is unnecessary expenditure? Does he agree that public money would be better spent on repairing secondary roads throughout the country on which every hon. Member—

Mr. Speaker: Order. I do not know whether that comes under British Rail.

Mr. Fowler: I understand my hon. Friend's concern and I am aware that he has a question on the subject on the Order Paper. I shall leave my hon. Friend the Parliamentary Secretary to answer it.

Mr. Booth: Does the right hon. Gentleman accept that there is no provision within British Rail's present capital programme for the replacement of the many

diesel multiple units, which is now urgent? Will he be discussing with the chairman of British Rail the increase in the capital programme for British Rail that is necessary to meet that urgent problem?

Mr. Fowler: Yes, I shall discuss that important matter with the chairman. As I said to the hon. Member for Blackburn (Mr. Straw), it is one of the issues that I shall want to take up with him.

Concessionary Travel

Mr. Dormand: asked the Minister of Transport whether he will seek to remove the anomalies which exist in the schemes for concessionary travel operated by different local authorities.

The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke): I refer the hon. Gentleman to the answer given to my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) on 20 June.

Mr. Dormand: Is the Minister aware of the confusion and bewilderment caused to the beneficiaries of these schemes, especially when the schemes in adjoining areas vary a great deal? Would it not be better if there were a national scheme so that recipients would feel that they were all receiving equal benefit?

Mr. Clarke: We believe that these matters are best sorted out by local authorities, which can judge varying local needs. We hope that local authorities will do what they can to resolve conflicts. I know that the county of Durham has evolved a county-wide scheme by agreement with the local authorities concerned.

Mr. Farr: I ask my hon. Friend to give the matter further consideration. Is he aware that wide and costly variations exist in one local authority area compared with another authority's adjacent area, which hits the disabled and old people extremely hard?

Mr. Clarke: I appeciate that anomalies are unpopular. However, there are differences in the needs and transport structures of different counties. We believe that local authorities must balance the needs of their areas with the desire to avoid unnecessary anomalies.

Mr. Sever: Is the hon. Gentleman aware that his political colleagues in the


West Midlands in both political parties consider themselves to be pioneers of concessionary fares, especially for the elderly? Is he aware that there is enormous demand that there should be some equalisation throughout the country, as my hon. Friend the Member for Easington (Mr. Dormand) has indicated, so that schemes may be seen to be fair and just?

Mr. Clarke: I am aware that differences throughout the country do not reflect party political divisions. The example to which the hon. Gentleman draws attention shows that Conservative councils are equally ready to respond to their local needs when the case exists for a discretionary fares system.

Manchester-Sheffield Railway Line

Mr. Andrew F. Bennett: asked the Minister of Transport if he will make a statement about the future of the Manchester to Sheffield via Woodhead railway line.

Mr. Flannery: asked the Minister of Transport whether he has received any proposals for closure of the railway line from Sheffield to Manchester via Woodhead.

Mr. Kenneth Clarke: I refer the hon. Gentlemen to the answer I gave to the Member for Penistone (Mr. McKay) on 24 May.

Mr. Bennett: The Minister will be well aware that for the past 12 months there have been rumours about the future of this railway line. Is it not high time that the rumours were scotched? Does he agree that with the energy crisis it would be crazy for anyone to contemplate abandoning an electrified line?

Mr. Clarke: I am aware of the rumours and the proposals. However, it is a freight-only line, for which the Minister's consent is not required. I am aware that the British Railways Board is discussing its proposals with the local authorities and the trade unions concerned. No doubt the board will make no decision until the consultations are complete.

Mr. Flannery: May I tell the Minister that only this morning I received a letter from the Sheffield district council enclosing a cutting from the local newspaper, the Sheffield Star, in which a leak has been reported that a decision has already

been taken to close the line? Will he accept that we in the Sheffield area as well as our friends in Manchester feel that to keep the line would be as good as a public statement to the effect that the whole area is not to be run down? Is he aware that the trade unions and councils that are concerned at both ends of the line are deeply involved and extremely worried?

Mr. Clarke: If a decision has been taken, it has not been taken by Ministers. It is my understanding that the board appreciates the concern that has been expressed. It is involved in discussions with those to whom the hon. Gentleman has referred.

Miss Maynard: Will the Minister use his influence to ensure that the line is kept open? Surely it would be ludicrous to close it when British Rail is urging the electrification of the whole of its system. Would it not be better if the Minister helped to develop a better inter-city route and better inter-city services between Sheffield and Lancashire?

Mr. Clarke: That is for the board to decide, using its judgment of the traffic needs of the area. The board operates freight-only lines according to a commercial remit. It would not be right for Ministers to try to take powers that they do not have at present to interfere with decisions taken by the board concerning freight-only lines.

Mr. John H. Osborn: There are two routes, one going west from the Hallam constituency and the other over Wood-head. Is it not right to consider the alternatives? Is it not important to electrify the railway line running from London to Sheffield first?

Mr. Clarke: I have no doubt that the board will weigh the competing considerations and traffic needs before finally making its decision.

Fuel Consumption

Mr. David Price: asked the Minister of Transport what proposals he has to encourage more economical fuel consumption by motor vehicles of all classes using the public roads of the United Kingdom.

Mr. Michael McNair-Wilson: asked the Minister of Transport what steps he is


taking to encourage fuel economy in the transport industry.

Mr. Fowler: The Government are considering a number of measures to reinforce the effect on fuel consumption which will inevitably result from the rise in fuel prices. I am considering measures to reduce the present restrictions on car sharing.
The Government have also recently reached agreement with motor manufacturers on a scheme to reduce the petrol consumption of new cars by 10 per cent. over the next five years.

Mr. Price: I thank my right hon. Friend for that reply. Does he agree that, whatever may be the short-term improvement in petrol supplies, we have a long-term problem? Will he therefore use his offices to encourage new methods of propulsion in motor vehicles? I have especially in mind the electric car, the chemical fuel cell and a number of other methods that have been around for some time that can now make an important contribution to energy saving on our roads.

Mr. Fowler: I totally agree with my hon. Friend. I accept what he says about the long term. A great deal of research has been carried out on electric vehicles by both Government and industry. That is something that we shall continue to support.

Mr. McNair-Wilson: May I impress upon my right hon. Friend the apparent dearth of information about the most economic speed for a particular size of engine in terms of fuel economy? Is he aware that the 56 mph figure that is so often quoted in motoring magazines is misleading the motoring public into believing that that is the most economic speed, whereas, I gather, economic speeds vary according to the size of car?

Mr. Fowler: My hon. Friend has raised this matter with me before. I shall give it further consideration to ascertain whether further improvement may be made.

Mr. Cook: Does the right hon. Gentleman accept that, whatever improvements are made to the motor car, public transport will always remain more economical

in the use of fuel? Will he consider the imaginative lead given by the Swedish Government, who have responded to the energy crisis by slashing rail fares? Does he agree that that is the type of measure that we need to get traffic off the roads and on to the right track?

Mr. Fowler: I note the last part of the hon. Gentleman's supplementary question. Clearly, a decision on fare levels is for the British Railways Board. It has considered these matters and has come to the conclusion that a general reduction would not lead to the increased revenue that it wants. Its approach has been to have selective reductions, such as the recently introduced family rail card scheme, which I think have much greater potential.

Mr. Dudley Smith: Will my right hon. Friend resist suggestions that the speed limit should be reduced? Is he aware that that would cause the maximum of inconvenience and the minimum of overall saving?

Mr. Fowler: My hon. Friend is right. The last time that this took place, the police found extreme difficulty in enforcing the laws, which caused a great deal of confusion to the public.

Mr. Freeson: The Minister referred to the research being undertaken into battery-operated vehicles. Is he satisfied that this research is being given the emphasis and resources that are required? It has been going on for very many years. Is it not about time that there was a breakthrough in this matter with much more effort being put by the Government and other sources into getting a successful vehicle on to the road?

Mr. Fowler: I shall look again at that point. The information that I have indicates that there is a considerable amount of research going on. I shall review that in the light of the energy crisis and see whether further impetus can be given.

Channel Tunnel

Mr. Costain: asked the Minister of Transport what discussions he has had with the British Railways Board in regard to its proposals for a single rail Channel tunnel link; and when he will be in a position to announce the Government's policy on this proposal.

Mr. Fowler: I am giving the British Railways Board's proposals careful consideration and hope to make an announcement in due course.

Mr. Costain: Does my right hon. Friend appreciate that for one decade all our traffic plans were in limbo because the Channel tunnel was—and then was not—going to be built? Does he appreciate that as soon as it was decided to go on with it the road pattern was cancelled? My right hon. Friend's predecessor forgot that it had been cancelled and kept it as it was. Will my right hon. Friend acquaint himself with the matter so that there may not be another 10 decades of indecision?

Mr. Fowler: I entirely appreciate the consistent position taken by my hon. Friend on this matter and the need for the end of uncertainty, especially in his constituency. We shall seek to reach a conclusion as soon as possible. I give the assurance that either my hon. Friend the Parliamentary Secretary or I will pay a visit to his constituency to look at the position on the ground.

Mr. McNamara: When reaching his decision, will the Minister bear in mind the grave concern felt in the North-East Coast ports about the possibility of the development of a Channel tunnel, the important amount of public investment that has already taken place there, and the jobs that would be at risk if such a step were taken?

Mr. Fowler: Obviously, those are all issues that we must consider in our evaluation of the British Rail scheme. British Rail is pressing this scheme forward very hard.

Mr. Michael McNair-Wilson: May I impress on my right hon. Friend the value of a Channel rail link in switching British Rail into Euro-rail? May I draw his attention to the value it might have in the argument about a third London airport, as we could collect passengers from European airports and not take up more valuable land in this country for an airport that most people do not want?

Mr. Fowler: I take on board the last point made by my hon. Friend. Clearly, such a tunnel would be of enormous importance for British Rail. However, it will take some time to evaluate this

matter. I shall seek to come to a conclusion as soon as possible.

Mr. Prescott: In reaching his conclusion, will the Minister say whether, as with previous Governments, he considers that this project must be commercially profitable or that it should simply be an important communications investment?

Mr. Fowler: May I first welcome the hon. Gentleman as an Opposition Front Bench speaker on transport? I welcome his intervention. The Government will take firmly on board the need for the commercial viability of the Channel tunnel.

Nuclear Waste (Transportation)

Mr. Dubs: asked the Minister of Transport whether he is satisfied that the transport of nuclear waste by rail across South London is safe.

Mr. McNamara: asked the Minister of Transport whether he is satisfied with the safety of containers carrying nuclear waste from Hull to Windscale by railways; and if he will make a statement.

Mr. Kenneth Clarke: Yes, Sir. I am fully satisfied that the very high international standards applied in this country to all movements of irradiated nuclear fuel provide adequate protection for the public.

Mr. Dubs: Is the Minister aware that the transport of nuclear waste is causing great concern to people living in populated areas? Will he make available to those people the full reasons why he is so satisfied that everything is all right?

Mr. Clarke: I realise that it causes great concern. Therefore, I have taken a personal interest and looked into the testing and research that is done. I shall happily make available to any Member of Parliament the details of such research as we have and the films made. These vehicles have been tested to the highest international standards to withstand very high-speed crashes of the kind that do not occur even once in a lifetime.

Mr. McNamara: The House will be relieved to a certain extent by what the hon. Gentleman said. Is he happy with the cargo-handling methods being used for the transhipment of these cargoes brought into our ports? Is he satisfied


that the people involved are sufficiently aware of the risks and are properly trained in the tasks that they undertake?

Mr. Clarke: I shall look into the cargo-handling facilities at the ports to see whether there is cause for concern. Recent press reports dealt with the flasks inside the main vehicles that were used only when the materials were being handled inside Windscale. Otherwise the materials are encased in large 50-ton containers, which can be handled as ordinary rail traffic with perfect safety.

Sir Bernard Braine: Is my hon. Friend aware that nuclear waste is not the only hazardous substance conveyed by rail and road and that there are anxieties about the transportation of hazardous chemicals and liquefied gases, especially from constituencies such as mine? Will he say what progress is being made in introducing stricter control measures, especially in the routing of such substances by road or rail?

Mr. Clarke: Nuclear waste has a higher standard applied than any other dangerous substance. I entirely accept what my hon. Friend said about the need to look at the precautions in respect of other dangerous substances. We take a continuing interest in that. I understand my hon. Friend's concern about the routing of these substances, but that must remain a matter for British Rail as long as the vehicles used are fully safe.

Mr. Arthur Lewis: The Minister and I have had considerable correspondence on this subject, especially about the carriage of these substances in the East End of London in peak hours. Is it true that at no time has anyone discussed the matter with the trade unions in the railways, fire brigades and safety services? Surely the matter should first be discussed with those who are doing the handling as they must handle the material in an emergency.

Mr. Clarke: I always look forward with pleasure to my correspondence with the hon. Gentleman. I am assured that consultations have taken place, where appropriate. The fire and emergency services are aware of the procedures that exist if an emergency ever occurs. But there has not been one in 17 years.

Mr. Lewis: Of course there has not. There is always a first time.

Mr. Clarke: There is no danger whatever to the public travelling in London at peak hours.

Commuter Railway Lines

Mr. Garel-Jones: asked the Minister of Transport whether he is satisfied with the present standard of service on British Railways commuter lines.

Mr. Fowler: No. There is undoubtedly room for improvement.

Mr. Garel-Jones: I am grateful for that reply. In view of the difficulties and hardships suffered by commuters in the past five years, will my right hon. Friend confirm that there will be no autumn rise in fares this year?

Mr. Fowler: The board announced that it plans to freeze rail fares for the remainder of this year provided that fuel prices remain reasonably stable. The chairman of British Rail has paid tribute to the Budget measures in helping him to come to that conclusion.

Mr. Walter Johnson: Does the Minister agree that what is required is greater investment in British Rail to enable it to build new rolling stock and carry out a programme of modernisation? That is the way to improve the lot of the commuter.

Mr. Fowler: Yes. Obviously, investment is one part of it, but service is another part. I am sure that the hon. Gentleman, with his knowledge of the railway industry, welcomes the initiative of Sir Peter Parker in working to develop a commuters' charter in which a standard of service is laid down for railway passengers.

Mr. Burden: Will my right hon. Friend take a closer interest in the problems of commuters, the failure of trains to run properly to time, the dirty condition of trains and sometimes the cancellations that cause great anxiety and difficulty to commuters? Will he try to do something about the matter together with the chairman of British Rail?

Mr. Fowler: Yes. I certainly shall do all that I can to encourage better commuter services because I recognise the importance of what my hon. Friend has said. A common and useful way forward is the commuters' charter, which was put forward by the chairman of British Rail.

Mr. Spriggs: Is the Minister aware that arrears of repairs on the railways are considered to be the main cause of many delays to commuter passengers? Will he take into consideration what my hon. Friend the Member for Derby, South (Mr. Johnson) said about investment? If we are to run trains on time, we must get investment right.

Mr. Fowler: Clearly, investment is part of the key. We are now spending £45 million on new signalling equipment on the lines into Victoria, new rolling stock for commuter services is being built and the St. Pancras-Bedford line is being electrified. I agree that investment is a part, but it is only one part, of improving the service for the railway passengers, which is the common aim of hon. Members on both sides of the House.

Mr. Forman: Is my right hon. Friend aware that, while many of my commuting constituents will be delighted with his robust and critical attitude concerning British Rail services, he would please them even more if he would make it clear that it is the Government's view that there should not be a bias in British Rail's finance against the captive inner London commuter as compared with the longer-distance traveller?

Mr. Fowler: Pricing is a matter for British Rail, but I am sure that the chairman of British Rail has my hon. Friend's point particularly in mind.

Mr. Spearing: Is the Minister aware that last May I had the good fortune to travel from an entirely new station in my constituency on a new service, from North Woolwich in Docklands to Camden Road in North London? Is he aware that since the oil crisis British Rail has withdrawn some of those services? Will he assure the House that there have been no withdrawals from British Rail's commuter or other services due to shortage of fuel?

Mr. Fowler: In the main, commuter services have not been affected in any way by the fuel shortage, but I will look into the hon. Gentleman's point.

A39 (Wadebridge Bypass)

Mr. Neale: asked the Minister of Transport if he will bring forward the date of the construction of the A39 trunk road bypass of Wadebridge.

Mr. Kenneth Clarke: An outline feasibility study into possible routes has just been completed. When this has been examined, I shall consider whether the scheme can be included in the trunk road preparation pool. At this stage, it is too early to predict a possible start date.

Mr. Neale: May I impress on the Minister the fact that there were 3·4 million tourists corning into Cornwall last year, using only three major trunk routes, and that the Wadebridge bypass will bring urgent help to an area that is heavily congested with holiday traffic, and to the tourist industry generally?

Mr. Clarke: I know of the concern felt in the area, and in particular I know of my hon. Friend's concern that the road should be expedited. The moment the Cornwall county council as agent has completed an outline feasibility study into the possibility of the bypass, I shall make sure that further work is continued as soon as possible.

Fuel Supplies

Mr. Ron Lewis: asked the Minister of Transport what action he has taken to ensure the maintenance of fuel supplies for the public transport undertakings for which he has responsibility.

Mr. Fowler: As my right hon. Friend the Secretary of State for Energy has made clear to the House, all consumers of energy must play their part in meeting the target of a 5 per cent. reduction in demand. It should be possible for public transport operators to contribute to this saving without essential services being affected.

Mr. Lewis: Does not the right hon. Gentleman accept that the nation's need to cut back on oil consumption demands an increase in the use of public transport? Is it not the case that both British Rail and the National Bus Company have had to withdraw services as a result? Will he recognise that it is the job of the Government and not of the oil companies to ensure that there is essential fuel in the public sector? Will he take immediate action about it?

Mr. Fowler: If by "immediate action" the hon. Gentleman means that I should introduce some form of direction or rationing, I must tell him that that is not the Government's position; nor do I think


that it should be. I know of the hon. Gentleman's interest in public transport systems. The present energy shortage, in its wider context, provides an opportunity for public transport to win new passengers. I know that both the chairman of British Rail and the chairman of the National Bus Company are conscious of the opportunity that the energy shortage produces for them.

Mr. Gummer: Does my right hon. Friend agree that in winning new passengers it is important that British Rail should not cut off old services? On the East Suffolk line, the opportunity afforded by these cuts has been taken to cut necessary services. Would it not be much more sensible to pressure British Rail to save fuel by properly organising the uses to which it is put rather than adopting a simple system of slashing services on lines that British Rail would rather like to close?

Mr. Fowler: I think that my hon. Friend is unfair when he says that British Rail is slashing services, because that is clearly not the case. A number of off-peak and non-scheduled services have been withdrawn. I will look at his case, but the House should recognise that British Rail has not had to do the amount of cutting that at one stage it thought necessary.

Mr. John Home Robertson: Would the Minister like to explain how those local authorities which have the responsibility for clearing snow during the winter can effectively apply a 5 per cent. cut in fuel consumption? How on earth can public transport function if the roads are not cleared?

Mr. Fowler: I do not think that that is one of the major problems at the moment.

Rural Transport

Mr. Iain Mills: asked the Minister of Transport if, in view of the effect of increasing petrol and diesel oil costs on operating costs of public transport executive bus services, he will now seek to change at the earliest opportunity the licensing powers of the traffic commissioners so as to allow private enterprise operators to offer services in rural areas.

Mr. Fowler: I am urgently examining ways of reforming the bus licensing system with the aim of allowing new ser-

vices to develop. I believe that this will be to the benefit of rural areas.

Mr. Mills: Will the Minister further consider, once this is possible, issuing guidelines to local authorities to suggest further ways of encouraging private enterprise mini-coach services, particularly for rural areas?

Mr. Fowler: I will consider that proposal. I believe that there is a great potential for the provision of new services in rural areas. As many of my hon. Friends who represent rural areas know, transport in those areas is often very unsatisfactory.

Mrs. Dunwoody: Is the Minister aware that he cannot have it both ways? He cannot undercut existing bus services by giving routes to cheap-rate private enterprise people and expect those existing bus services to remain viable. Will he please make sure that safety is the first matter that he bears in mind before he hands out any licences to cheapjack operators?

Mr. Fowler: I have never sought in any way to depart from the safety standards of the bus licensing system, and I agree with the hon. Lady's remarks on that aspect. But she must recognise that there are inadequate services in many parts of the country and that it is sensible to encourage new operators to come forward to provide the necessary services.

Mr. Stokes: In rural areas, will my right hon. Friend consider some alternative form of transport, such as horse transport, which is extremely economical?

Mr. Fowler: I think that that comes under what my Department would call unconventional forms of transport. I will look at it.

Mr. Hardy: Does the Minister agree that it is essential that public road transport should be encouraged as an intelligent response to the energy crisis? In view of that, will he tell the House whether he regards the policies and priorities of the South Yorkshire county council in that regard as desirable?

Mr. Fowler: The South Yorkshire county council had its battles with the last Administration on that point. I regard public transport—and new public transport—as being extremely important at the present time.

Motor Cycle Training

Mr. Goodlad: asked the Minister of Transport when he expects to receive the report of the advisory committee on motor cycle training; and if he will make a statement.

Mr. Kenneth Clarke: I understand that the committee has now held its final meeting, and its report can be expected to be with my right hon. Friend very shortly.

Mr. Goodlad: In view of the accident record of motor cycles and the serious injuries sustained by their riders, will my hon. Friend, when he receives the report, give the highest priority, within the resources at his disposal, to increasing the availability of training facilities?

Mr. Clarke: I entirely agree with what my hon. Friend says about the seriousness of the present motor cycle accident statistics. Once we have the report we shall be considering urgently what can be done to increase the number of people receiving professional training before they receive their full licence.

Mr. John Evans: Would it not be an excellent contribution to road safety if people were forbidden to drive a motor cycle above 50 cc capacity until after they had passed the test?

Mr. Clarke: We shall be looking at the present limit on the size of motor cycle avilable to those who have not passed a test. At the moment, the limit is 250 cc, but I am aware that some of the more modern vehicles can travel at up to 100 mph. I await the advice of the advisory committee on that topic.

French Minister of Transport

Mr. Whitehead: asked the Minister of Transport when he expects next to meet the French Minister of Transport.

Mr. Fowler: I look forward to seeing him at the meeting of the Council of European Transport Ministers later this year.

Mr. Whitehead: When the Minister meets his French counterpart, will he—despite what was said in the House earlier this afternoon—congratulate him on authorising the final planning stage of the Channel tunnel? Does the Minister agree

that there should be British Government support for this project, which, particularly at a time of energy crisis, has a major contribution to make in terms of international communication and will stop the ceaseless proliferation of European juggernauts on our roads?

Mr. Fowler: I know of the hon. Gentleman's interest in this matter and I think that he has made an important point. I can only repeat that we shall come to a conclusion, as indeed the last Administration were also pledged to do, as soon as we possibly can but preferably before the end of the year, the target date set by the former Secretary of State.

Mr. Warren: Will my right hon. Friend take action in collaboration with the French Minister of Transport to achieve a reduction in the cost of air and sea transportation across the Channel, which is becoming an inhibition to trade between the two countries? In those consultations, will he take prompt action to reduce the growing bureaucracy of the Customs and Excise affecting passengers and trade transportation between Britain and France?

Mr. Fowler: I shall look at both those points. The first certainly comes within my jurisdiction. I will talk about these matters with the French Minister.

Mr. Cook: If it is the Minister's intention to judge the Channel tunnel by reference to commercial profitability, will he inform the House what other major communication links he judges by that criterion?

Mr. Fowler: All roads have exactly the same inbuilt economic return. However, as I was pressed by the hon. Gentleman's Front Bench spokesman to judge by that criterion, I assumed that he was in agreement.

Mr. David Price: Will my right hon. Friend, in considering once again the possibility of a Channel tunnel, bear in mind the fact that it would be necessary to reorganise our own rail system so that we could run vehicles right through Europe and into the heart of Britain, not ending in London as originally proposed? In order to obtain the benefit that many of us seek from a Channel tunnel, it will be necessary to spend a lot of money on British Rail.

Mr. Fowler: The low-cost option, which is what the British Railways Board is putting forward, meets many objections that people have to the former scheme.

Roads

Mr. Knox: asked the Minister of Transport when the next White Paper on roads will be published.

Mr. Fowler: We shall do so as soon as possible after the conclusion of current discussions on our public expenditure programme for the next few years. In the meantime, however, I will place in the Library copies of a statement of my policy on trunk roads. This will provide general guidance against which current decisions can be taken, and will be used as the formal statement of policy at inquiries into the route of proposed new or improved trunk roads.

Mr. Knox: Does my right hon. Friend agree that, however justified public expenditure cuts are in some areas, there is no case for further cuts in the road programme in view of the savage cuts made in recent years? Can he confirm that roads in Britain are more crowded than those of our international competitors, which argues for a bigger rather than a smaller road building programme?

Mr. Fowler: I do not agree with either of the points made by my hon. Friend.

Mr. Snape: Did the Minister see the report in The Guardian this morning referring to the GLC's desire to circumvent the existing road building safeguards? Will he tell Sir Horace Cutler and his cronies at County Hall that we spent a long time having those safeguards built into the existing procedure and we do not want to see our democratic procedures undermined for the benefit of the road-building lobby?

Mr. Fowler: Obviously, Sir Horace Cutler will hear what the hon. Gentleman has said on this matter. The procedure by which the GLC introduces a Private Bill is not a matter for the Government.

Mr. Jessel: What priority will my right hon. Friend give to the completion of the M25 circular motorway around London?

Mr. Fowler: The M25 will continue to be the first priority of the road building programme.

Mr. Skinner: Will the Minister's statement include a section about those people who operate vital services, such as district nurses? Is the Minister aware that district nurses receive an allowance of only 8·4p per mile? Although it is not a matter for him, will the right hon. Gentleman ask his colleague to raise this allowance—and sharp? There are some nurses listening.

Mr. Fowler: I am sure that the nurses whom the hon. Gentleman says are listening will not misunderstand me if I say that this matter in no way arises out of my White Paper on roads.

Commuter Travel

Mr. Higgins: asked the Minister of Transport if he will make estimates of the potential costs and benefits from policies designed to reduce variations in peak and off-peak travel on commuter roads and railways.

Mr. Kenneth Clarke: The costs and benefits vary so widely according to local circumstances that the available data preclude the preparation of meaningful national estimates.
Considerable savings could be made, however, if peak demand could be spread and the efficiency of peak hour transport improved, and we are looking at measures which might help in this respect.

Mr. Higgins: I accept the difficulty of doing this on a national basis, but does my hon. Friend agree that the amount of congestion and waste of resources in London caused by rush hour traffic is quite appalling? As a first step, will he consider whether Government Departments might stagger working hours?

Mr. Clarke: I entirely accept what my right hon. Friend says about the considerable waste of transport resources and other problems caused by peak hour travel in London. Certainly I agree that flexible and staggered hours make a valuable contribution, and most Government Departments are in the process of introducing flexible working hours wherever possible.

Mr. Ioan Evans: Is the hon. Gentleman aware that President Carter is encouraging the use of public transport? Do we not need to look at the cost benefit


of having an integrated transport service so that goods transported by juggernaut lorries are transferred to the railways and people are encouraged to travel by public transport?

Mr. Clarke: I can only repeat what has been said already—that we appreciate the role of public transport. The public transport system of the Americans is deficient compared with our own. Our problems are not camparable with those of America. We already give priority to public transport where it is desirable and within the resources available.

Mr. Dykes: Is it not rather unadventurous of British Rail to say "No" to the idea of reducing fares so as to attract more customers on all routes? Will my hon. Friend look at this again, because it seems very negative for British Rail to say that it is unconvinced of the merits of such a course of action?

Mr. Clarke: British Rail has to make its own judgment about whether the proposed cuts in fares will generate enough additional traffic for it to maintain its financial targets. British Rail has a very wide range of fare bargains designed to appeal to travellers. The new family railcard is the latest example.

Lorries

Mr. Chapman: asked the Minister of Transport if he will make a further statement about his decision to institute an independent inquiry into lorries and their impact on the environment, with particular reference to the recent EEC draft directive.

Mr. Fowler: I hope to make a further statement soon, when I will announce the form of the inquiry and its membership.

Mr. Chapman: Will my right hon. Friend confirm that if the country were to accept and implement the EEC draft directive on heavy lorries the lorries using our roads would need to be no wider, no higher and only 20 in. longer and that there would be no greater axle weight on the roads? If that is so, does my right hon. Friend agree that there are environmental arguments for having these heavier lorries since they would be able to take greater loads and thereby make fewer journeys?

Mr. Fowler: I am aware that my hon. Friend has consistently expressed that view, but it is not a view that goes unchallenged in this House. I believed that the proper way to proceed was to have an independent inquiry into the use of heavy lorries. That is why we proceeded as we did, with the agreement of the Opposition.

Mr. R. C. Mitchell: Will the Minister stop prevaricating on this issue and give a very firm undertaking that he will not yield to the road haulage lobby and introduce heavier and larger lorries on to our already overcrowded roads?

Mr. Fowler: I can tell the hon. Gentleman that we shall not make a decision before the independent inquiry has reported; otherwise, there would be no point in having an inquiry in the first place.

Mr. Michael Brown: Does my right hon. Friend accept that if a larger vehicle is introduced there will probably be an additional axle? That would mean that the weight displacement and the damage caused to roads would actually be less.

Mr. Fowler: My hon. Friend has put a fair point. It is obviously a view that is held by the industry. All the converse points that have been put show the wisdom of having an independent inquiry into this whole question.

Driving Tests (Metropolitan Area)

Mr. Biggs-Davison: asked the Minister of Transport what is the average time between applications for and the holding of driving tests in the metropolitan traffic area.

Mr. Kenneth Clarke: The average time is 33 weeks. This is far too long, and waiting times everywhere must be reduced. New examiners are being recruited and trained, despite the present moratorium on recruitment in the Civil Service. A thorough review of possible measures to improve the situation further is well under way.

Mr. Biggs-Davison: Is my hon. Friend aware that in these summer months some of my constituents have been told that tests cannot be held after 4.15 p.m.? Is it also the case that tests are not being


held on Saturdays, despite the accummulation of tests which should be held?

Mr. Clarke: We are looking at what can be done to make the best use of the manpower that we have. My understanding is that full use is being made of our examiners within present limitations. I will inquire into the local matters referred to by my hon. Friend, but, of course, tests are not held at times and in places where traffic conditions are so severe that they might adversely affect the candidates.

Mr. Arthur Lewis: Do I understand from the Minister's original reply that, notwithstanding the Government's cuts in public expenditure, if there is a need for extra expenditure it will be forthcoming?

Mr. Clarke: We have a policy of recruiting civil servants where there is a need for them and not indiscriminately recruiting across the board. More important, the hon. Gentleman might like to reflect on the fact that these examiners are paid entirely from the fees charged to examinees. It is an entirely self-financing service, and no increase in public expenditure is involved.

Mr. Aitken: Since there is a pressing need to reduce driving test delay times, and since there is also a requirement to reduce Government expenditure and not to recruit new civil servants, will my hon. Friend give serious consideration to transferring the responsibility for these tests to the AA and the RAC, which would carry them out perfectly well under Government supervision?

Mr. Clarke: We are prepared to look at—indeed, we are looking at—every reasonable suggestion, but we must guard against anything that either reduces the standards of the testing applied or was even believed to reduce the standard of the tests required for the new driving licence applicants.

Oral Answers to Questions — CIVIL SERVICE

Reduction

Mr. William Hamilton: asked the Minister for the Civil Service if he is satisfied with the progress made in reducing the size of the Civil Service;

and if he will make a statement on the likely reduction in the next 12 months.

The Minister of State, Civil Service Department (Mr. Paul Channon): Yes. Adjusted cash limits for 1979–80 were published on 26 June, which provide for a 3 per cent. cut in Civil Service staff costs subject to certain limited exemptions. As regards further reductions, I refer the hon. Member to my reply to my hon. Friend the Member for Totnes (Mr. Mawby) on 11 June.

Mr. Hamilton: Can the hon. Gentleman give specific figures on specific Departments, namely, the DHSS and the Department of Employment? Is he aware that there are increasing complaints from beneficiaries of supplementary benefit, child benefits and the like of a deteriorating service as a direct consequence of the policy of suspending recruitment to these Departments but increasing recruitment of driving examiners? Is not this a disgraceful policy? Will the hon. Gentleman have another look at the two Departments to which I have referred, since reductions in personnel result in delays in benefit payments?

Mr. Channon: Limited exemptions are for my right hon. Friends who are in charge of the Departments concerned. I am surprised to hear what the hon. Gentleman says, but I shall draw it to the attention of my right hon. Friends.

Mr. James A. Dunn: Is the Minister aware that the reorganisation of resources is causing great concern? How will this affect the dispersal systems that are now operative under the Hardman report?

Mr. Channon: If the hon. Gentleman will be patient, there is a later question on that very point.

Mr. Bruce-Gardyne: Will my hon. Friend consider the case for extending for a full year the moratorium on recruitment into the administrative Civil Service?

Mr. Channon: I shall certainly bear in mind what my hon. Friend says.

Mr. O'Neill: Is the Minister aware that the freeze on Civil Service recruitment has disbarred public servants from participation in the job release scheme? Is he aware that one in six of the initial applicants for the job release scheme came from the Civil Service, and that about


35,000 civil servants are at present eligible but are, in effect, being prevented from participating in this scheme? Will the hon. Gentleman continue with the simplistic approach towards allowing people to leave the Civil Service?

Mr. Channon: I have already said that the Government are examining the recruitment ban for future action. The job release scheme has had to be put in abeyance for civil servants, because it has not been possible to meet the conditions of filling vacancies from the unemployment register.

Mr. Wrigglesworth: Will the Minister confirm that he is at present reviewing cuts of 10 per cent., 15 per cent. and 20 per cent. in the level of expenditure in the Civil Service? Does this not mean, and will he make it clear when the announcement finally comes, that there will be substantial cuts in services and jobs? Does he accept that there will be stiff opposition from Labour Members to any such draconian cuts at a time of rising unemployment, and the utmost opposition to the cutting of central services for those who need protecting at a time of Government deflationary policies?

Mr. Channon: I note what the hon. Gentleman says. It is true that Departments have been asked to identify options for savings amounting to 10 per cent., 15 per cent. and 20 per cent. in their relevant expenditure, but no decisions have been taken and the Government will make a further statement in the autumn.

Retirement Bonuses

Mr. Bruce-Gardyne: asked the Minister for the Civil Service what value is attributed to the entitlement to tax-free retirement bonuses linked to the value of the index-linked pension in the assessment of comparability for the purposes of Civil Service pay awards.

Mr. Channon: The pay research process is concerned with the differences between the total superannuation benefits of civil servants and of those in comparable employments. No specific value is, therefore, attributed to the lump sum retirement benefit, which is, in any case, a common feature of occupational pension schemes.

Mr. Bruce-Gardyne: That is a surprising reply. Can my hon. Friend recall off-

hand any private company that would be allowed by the Inland Revenue to pay £35,000 free of tax to a retiring employee who, no doubt, would go off to take supernumerary employment as chairman of the Midland Bank or some such emporium? Are there any examples in the private sector that compare with this?

Mr. Channon: I am advised that this scheme follows the rules which many occupational pension schemes in both the public and private sectors follow. Indeed, under this scheme, employees are permitted to obtain a lump sum not exceeding in value three-eightieths of final remuneration for each year in service. That is not dissimilar from many schemes in both the public and private sectors. Taxation is a matter for my right hon. and learned Friend the Chancellor of the Exchequer and is laid down under the Inland Revenue rules.

No-Strike Agreement

Mr. Kenneth Lewis: asked the Minister for the Civil Service what discussions he has had with leaders of the trade unions covering the Civil Service with a view to securing a no-strike agreement within the Civil Service.

Mr. Channon: I refer my hon. Friend to the answer that I gave him yesterday.

Mr. Lewis: It was a surprise to me when I got an answer twice. There is a feeling among the general public that the limited agreement that my hon. Friend is seeking to reach does not go far enough. There is a feeling among the public that the public service is no longer—

Mr. Speaker: Order. The hon. Gentleman knows that he must ask a question and not give information.

Mr. Lewis: Is the Minister aware that the public feel that the public service generally, including the Civil Service, now goes on strike too easily at the drop of a file? If the Civil Service wants the privileges and all the advantages that it possesses, it should show loyalty to the public and to the Crown.

Mr. Channon: I have a great deal of sympathy with that view. As I said to my hon. Friend yesterday, I hope that it may be possible to conclude no-strike agreements in a few essential services. We


shall certainly examine the position of the Civil Service in the light of this decision.

Mr. John Evans: Does the Minister accept that a fundamental part of democracy is the right to strike? Is he also aware that within the engineering profession of the Civil Service there is a great deal of ill feeling at the way that the Government are handling its pay claim? If the Government wish to create a society based on good engineers and scientists, why do they not settle this claim?

Mr. Channon: There is a later question on that very point. I note the views expressed by the hon. Gentleman in the first part of his question. There is also some obligation on those in the public sector to try to serve the public and not to inconvenience it if it can genuinely be avoided.

Mr. Fletcher-Cooke: Whatever the idea of a no-strike agreement may be, what sort of sanction does my hon. Friend think he can write into such an agreement, and how enforceable would such a sanction be?

Mr. Channon: Those are some of the problems that I have in mind, and I shall seek my hon. and learned Friend's advice before proceeding further.

Dispersal Policy

Mr. Wrigglesworth: asked the Minister for the Civil Service if he will make a statement about the review of dispersal policy.

Mr. Bendall: asked the Minister for the Civil Service if he is satisfied with the job dispersal scheme; and if he will make a statement.

Mr. Marlow: asked the Minister for the Civil Service if he is satisfied with the job dispersal scheme; and if he will make a statement.

Mr. Channon: I refer the hon. Member and my hon. Friends to the answer that I gave my hon. Friend the Member for Bath (Mr. Patten) on 11 June.

Mr. Wrigglesworth: Is the Minister aware that the review which he is carry-

ing out has caused deep disappointment in the recipient areas in the regions of this country? Will he, therefore, remember that any cuts in programmes of dispersal to the regions will be regarded as reneging on promises that have been made to the regions in the past, and that any short-term public expenditure gains that might be achieved as a result of cuts in the dispersal programme would be at the cost of massive public expenditure gains in the long term, which would go on accruing into the foreseeable future?

Mr. Channon: I shall certainly bear in mind what the hon. Gentleman says and consider it during the course of the review.

Mr. Bendall: Does my hon. Friend accept that 30 years of dispersal of jobs—[HON. MEMBERS: "Reading."]—around the country—[HON. MEMBERS: "Reading."]—I am not reading—have left the capital without jobs and homes? Will he make a statement aimed at reversing that policy?

Mr. Channon: That view has been expressed to me very forcefully by London Members from all quarters of the House, and it is also a factor to be borne in mind.

Mr. Marlow: Does my hon. Friend realise that those areas of the country to which population has been dispersed would he only too happy if that population were allowed to remain within London and the jobs and houses were provided within London?

Mr. Channon: That is a view that I have had to consider, and we are bearing all these considerations in mind.

Mr. Sheerman: Is the Minister aware that the overcrowding that will take place in London and the South-East as the Conservative Government's policies start to bite will denude areas such as Yorkshire and Humberside? It is putting back the clock to squeeze people into a part of the country that at present has a sufficiently large population and enough wealth.

Mr. Channon: Again, I note the hon. Gentleman's view. It is violently different from views expressed by other hon. Members, including those on the Labour Benches.

VIETNAMESE REFUGEES

The Lord Privy Seal (Sir Ian Gilmour): With permission, Mr. Speaker, I shall make a statement that has been made by my right hon. and noble Friend in another place on the Indo-China refugee problem. Hon. Members will be aware of the deep concern with which the Government have viewed the rapid deterioration of the refugee situation in South-East Asia over recent weeks. The Secretary-General of the United Nations, Dr. Waldheim, has now convened a special international meeting in Geneva on 20 and 21 July to deal with the problem. The Government welcome this move, which was originally proposed by my right hon. Friend the Prime Minister.
There can he no doubt that it is the callous and inhuman policies of the Vietnamese Government which are the root cause of the problem, and it is imperative that the Vietnamese Government change those policies. Meanwhile, the burden that the flood of refugees is imposing on others in the region can be relieved only by a major and genuinely international effort.
The Government have given very careful consideration to the extent of the humanitarian problems, and in particular to the appalling burden that is being placed oil the resources of the Government of Hong Kong. The United Nations High Commissioner for Refugees has asked us to accept a further 10,000 refugees from Indo-China for settlement here. We have agreed. Because of our direct concern for the situation in Hong Kong, over a period to be agreed with the Governor these extra refugees will be taken from Hong Kong, where there are already over 66,000 awaiting resettlement. My right hon. Friend the Home Secretary is getting in touch with the voluntary agencies which have played such a commendable role in helping with the resettlement of the refugees who have already arrived in the United Kingdom. I would like to take this opportunity of recording again the Government's gratitude to the voluntary agencies for the splendid work that they are doing in this field.
The Government also propose, subject to parliamentary approval, to make a further £5 million available from the over-

seas aid programme for dealing with the refugee problem in South-East Asia over the next 12 months.
My right hon. and noble Friend will himself attend the opening session of the Secretary-General's meeting in Geneva on 20 July. I can assure hon. Members that we shall play a full and constructive role in Geneva.

Mr. Shore: That is a welcome statement as far as it goes, both in terms of the numbers that the Government propose to accept for resettlement and in its condemnation of the callous behaviour of the Vietnam Government. I take it, however, that the two-day conference, which will inevitably be short, will focus on the major problem of resettlement that faces the whole of South-East Asia.
Can the Lord Privy Seal confirm that the offer to settle 10,000 refugees is to be our immediate response to the appalling pressure on Hong Kong, and that Britain, as the sponsor of the international conference, the country ultimately responsible for Hong Kong and a nation with a great humanitarian tradition, will he ready with others to make a continuing contribution to the resettlement of refugees, should that be necessary?
The statement naturally deals with the boat people from Vietnam, but can the right hon. Gentleman tell the House anything about what I believe are sometimes called the "foot people"—the vast numbers of refugees from other parts of Indo-China, and from Laos and Cambodia in particular, who have made their way, under appalling and distressing conditions, to Thailand? Is it the case that in Cambodia, in particular, a major cause of exodus is hunger? Has the right hon. Gentleman talked to the Red Cross about that second pressing Indo-China problem, and are there any plans for bringing food supplies to that area in order to alleviate it?
Finally, may I ask the right hon. Gentleman whether the Government have in hand any arrangements to ease and facilitate the reception of the 10,000 refugees who are to come to this island? If so, will his right hon. and noble Friend be prepared to make a statement at the appropriate time?

Sir I. Gilmour: I am grateful to the right hon. Gentleman for welcoming my statement and condemning the callous


behaviour of the Vietnamese Government. As he says, this is our immediate response, but, as he well knows, we have considerable problems in this country. We are an overcrowded island. We have responded to the request that was made by the United Nations High Commissioner for Refugees, and it would be unreasonable to expect us to make further undertakings at present.
The right hon. Gentleman is right to say that apart from the boat people there is a considerable problem concerning what he calls the "foot people". We hope that it will be dealt with by the Geneva conference, which we have been instrumental in setting up. He will be interested to know that we have raised, with our partners in the Community, the question of what should be done about providing food relief for the refugees in South-East Asia. The Community, before making further decisions, has agreed to make available 8,000 tonnes of rice and 1,500 tonnes of skimmed milk as emergency aid.
On the right hon. Gentleman's last point, my right hon. Friend the Home Secretary has arrangements ready. If necessary, at the right time he will make a statement on the subject.

Sir Paul Bryan: Is the Lord Privy Seal aware that the people of Hong Kong will be grateful for the Government's new gesture and for any further pledges that may be made at the Geneva conference tomorrow? Will he ask the Foreign Secretary when he is at that conference to do his utmost to see that Hong Kong gets its fair share of the sum of those pledges? Is my right hon. Friend further aware that over the past six months Malaysia has had 40 per cent. of its intake of refugees resettled, whereas Hong Kong, with 65,000 refugees in its camps, has had only 8·5 per cent. accepted for resettlement? Is that not discrimination in favour of inhumanity? No boats crammed with refugees have been towed out to sea from Hong Kong.

Sir I. Gilmour: I have a great deal of sympathy with what my hon. Friend says. There is no doubt that the Hong Kong Government have behaved in an exemplary fashion. I am hopeful and confident that what we have agreed to do will set an example to other countries in the inter-

national community to help Hong Kong. As my hon. Friend knows, the situation there is growing more grave daily. There are still thousands of refugees arriving. It is imperative that as a result of the Geneva conference other countries should agree to help Hong Kong with the appalling problem with which it is faced.

Mr. J. Enoch Powell: What possible grounds can there be, moral, political, historical or ethnic, for the admission to this country—[HON. MEMBERS: "Shame, shame."]—of large numbers of persons from Indo-China—a country with which we have no connections and towards which we have no obligations?

Sir I. Gilmour: There are moral, historical and ethical reasons for doing what we have done. The right hon. Member for Down, South (Mr. Powell) seems to be ignoring the appalling tragedy that is now being enacted in South-East Asia. It is something that has not happened on such a scale for 30 years. For us to ignore it, sit back and pretend that it is not happening, and to pretend that whatever happens elsewhere in the world is nothing to do with us, would be totally wrong and entirely contrary to the ethical and political traditions of this country.

Mr. Grimond: Is the Minister aware that his statement will give almost universal satisfaction? Is he also aware that we owe some obligation to people as human beings, even if they are a different colour and their misfortunes are not our fault? Can he say whether the international community, through the United Nations, has succeeded in bringing pressure to bear in Vietnam to stop this callous behaviour? Also, can he tell us whether there are still refugees pouring into Hong Kong, and has any direct aid been given to the voluntary societies to deal with this problem? I understand that £5 million of overseas aid has been given to Hong Kong, but is there any aid for the voluntary societies themselves?

Sir I. Gilmour: It is true that the £5 million is abroad, but some effect on public funds will be felt as a result of the reception of refugees in this country. I entirely agree with the right hon. Gentleman's remarks at the beginning of his question. This is a major humanitarian problem. We are, after all, part of the human race and we cannot stand aside.


The flow of refugees is continuing and there is no sign of its ceasing at present. We have tried to do what we can to bring pressure to bear on Vietnam, but our relations with that country are not very close. We have done what we can and we hope that other countries will do all they can, because it cannot be in the interests of the Vietnamese Government to alienate all their neighbours in South-East Asia.

Mr. Patrick McNair-Wilson: Can my right hon. Friend tell us who will pay for this operation? Is he aware that my constituents living around Sopley camp are very concerned whether this is a charge on the Government or whether, because local authority facilities are being used, the ratepayers will be expected to pay? Can he tell us when the first refugees in this new group will arrive, and whether the existing facilities will be used?

Sir I. Gilmour: This is a Government responsibility, and the expense will not fall on the local authorities.

Mr. Ennals: Contrary to the abhorrent views put forward by the right hon. Member for Down, South (Mr. Powell), there are those of us on both sides of the House and in all parts of the country who have been urging that more refugees should be admitted as part of a massive effort to deal with this huge problem, and we warmly welcome the statement today. This will give some relief to Hong Kong. Will the Minister accept from me, on behalf of the voluntary organisations, the assurance that they will co-operate to the full both with the Government and with local authorities in settling these unfortunate people in our country?

Sir I. Gilmour: I am grateful to the right hon. Gentleman. We deeply admire the efforts being made by the voluntary organisations. Obviously, we all wish that the situation had not arisen, but since it has it is only right that we should play our part in trying to solve it.

Mr. Hugh Fraser: Is my right hon. Friend aware that in Staffordshire members of the National Front took the part of the Vietnamese Government in trying to attack the local refugees but were dispersed with contumely by local police? Will he put further pressure on the Soviet Union to persuade that country, as far as it is possible to do so, to control this

movement, which is against all laws and all considerations of humanity? Will he endeavour to ensure that in his central organisation for the care of these refugees proper attention is given not just to the education of children but to the education, in the English language, of the adults who arrive here?

Sir I. Gilmour: I am sure that my right hon. Friend is absolutely right. It is important to educate not only the children but the adults, and the evidence so far in other countries is that these people learn very fast. I am grateful for what my right hon. Friend said in the first part of his question. Of course we shall do everything to try to make the Soviet Union bring its influence to bear on the Vietnam Government. So far we have failed in our efforts, but I cannot believe that it is in Vietnam's interests to fly in the face of the opinion of virtually the whole of the civilised world.

Mr. Frank Allaun: The Minister referred to the callous and inhuman behaviour of the Vietnamese Government. Did he make the slightest protest when the American Government were bombing that country to bits? I am not opposing the reception of refugees into this country, but would it not be possible for the British Government to give some relief to the thousands of political prisoners in Latin America who are being tortured at present? I gather that most of the Vietnamese refugees are not being tortured, but are getting out with considerable financial aid.

Sir L Gilmour: Even the hon. Member for Salford, East (Mr. Allaun) has never given a clearer example of double standards. Many of us took very different views about the Vietnam war, but that is nothing to do with what is taking place now. We see a callous, calculated policy to expel from Vietnam about 1 million people merely because they are of Chinese stock—

Mr. Skinner: The Minister is getting wound up now.

Sir I. Gilmour: Perhaps the racial policies of the Vietnamese Government appeal to the hon. Member for Bolsover (Mr. Skinner), but they certainly do not appeal to anybody else. By trying to defend those policies by talking about something that is going wrong elsewhere


in the world, the hon. Member for Salford, East really demeans himself. This expulsion from Vietnam is taking place on a scale that is unparalleled anywhere else, and if the hon. Member has any standards at all he should condemn what is going on.

Mr. Alexander: Will my right hon. Friend accept that there is a difference in this country between refugees and immigrants? Will he accept that we have an honourable history, over many centuries, of accepting refugees, and that many people on both sides of this House will be happy with his statement today? However, will he consider deducting from the total number of immigrants that we accept from other countries the number that we are accepting today from Vietnam?

Sir I. Gilmour: With due respect to my hon. Friend, there is a slight inconsistency between the first and second parts of his question. I entirely agree that there is a distinction between refugees and immigrants. I also agree that we have an honourable record both on refugees and immigrants. But as they are not the same thing, and as we are faced with a problem which, up to almost a year ago, nobody expected, I do not think that it is right to join these two categories together. They are relevant only in the sense that our country's capacity to absorb new people is limited. I do not think that any closer connection is justified.

Mr. Shore: Precisely because so many people are now at risk in the South China Sea, and because we must fear that their numbers will greatly increase in the days ahead, may I ask the right hon. Gentleman not to take up a firm position—it would be wrong to do so at present—about the nature and extent of the commitment that we and others may have to undertake? May I also press him on the question of the real shortage of food supplies inside Cambodia? If a major source of exodus is the lack of food inside the country, clearly the best way to relieve that is to get food in.

Sir I. Gilmour: I agree, but, as the right hon. Gentleman knows, that is not always easy to do. The European Community has acted. I take note of the right hon. Gentleman's comments, and

if more can be done to alleviate the problem I shall see that it is done. However, with respect, the right hon. Gentleman is pushing things too far. After all, we have made a commitment and a conference will take place in Geneva in the next few days. Surely it is rushing matters to look beyond that. We have made the commitment that we were asked to make and we hope that the Geneva conference, which we have been instrumental in setting up, will lead to an advance towards solving the problem. I do not believe that we should look further ahead than that.

Several Hon. Members: rose—

Mr. Speaker: Order. There is another statement to follow. I propose to call three more hon. Members from either side.

Mr. Ronald Bell: Is my right hon. Friend aware that every episode of immigration since the end of the war has been justified on the ground of extreme hardship? Those who have resisted that, like myself, have been accused of callousness on each occasion. That applies in the case of the West Indies in the 1950s, Kenya, Tanzania, Uganda, Bangladesh, and now Indo-China. Is my right hon. Friend aware that there is a real danger of self-indulgence in a matter of this sort, and that this overcrowded island in the North Sea should not be the terminus of any major migration?

Sir I. Gilmour: With respect to my hon. and learned Friend, I question his version of history. The initial impetus for immigration to this country did not spring from misery; it sprang from a feeling of being part of a Commonwealth in which people were allowed to migrate freely. That was the beginning of the matter. I do not believe that it is a question of self-indulgence. It is possible to be self-indulgent in either way—in a humanitarian or non-humanitarian way.

Mr. Hardy: Does the Minister agree that most hon. Members appear to endorse the Samaritan position? Does he agree that in the parable the Samaritan paid for the kindness that he showed? In his statement the right hon. Gentleman suggested that the moneys would be provided from the existing aid programme. Who will suffer as a result of that?

Sir I. Gilmour: I cannot answer that question. The hon. Gentleman knows


that we are re-examining our aid programme and cutting it. However, the aid programme is so organised that there is always a certain sum set aside for contingencies.

Mr. Peter Bottomley: I congratulate the Government on stopping on the Jericho road and not passing by on the other side. I ask the Minister to confirm that the country is not becoming a major terminus for refugees from Indo-China, because other countries are taking many more refugees than we are.

Sir I. Gilmour: I am grateful to my hon. Friend for his remarks. I believe that we have taken the right step. He is perfectly right in saying that other countries are taking many more refugees than Britain.

Mr. Ashley: Is not the truth of the matter that it is as politically unpopular now to help refugees from Vietnam as it was to help refugees from Nazi Germany in 1938 and 1939? There were no historical grounds for admitting the refugees from Nazi Germany. It is equally a matter of life and death for the Indo-Chinese refugees as it was for the Jewish refugees from Nazi Germany. Therefore, should not the Government defy popular prejudice and the National Front by repudiating the National Front's harassment and accepting a far larger number than the 10,000 that was announced today? Moreover, should not the Government provide those refugees with jobs and housing, in the face of unpopular public opinion?

Sir I. Gilmour: I agree with the right hon. Gentleman to some extent, but I do not believe that he is right to sniff at what we are doing. We are making a considerable contribution and I do not believe that it should be underestimated. I agree that it is something that we should do and that it would be wrong for us not to do it. There is a parallel with previous tragedies of the past, and none of us would want to repeat those.

Mr. Latham: My right hon. Friend is talking about hundreds and thousands of people who have been or are being drowned or murdered by pirates. Is he aware that many hon. Members were deeply regretful to hear the remarks of the right hon. Member for Down, South (Mr. Powell)? There are many in the

country and on both sides of the House who will give an unreserved welcome to my right hon. Friend's statement.

Sir I Gilmour: I am grateful to my hon. Friend for stating so eloquently what I believe the position to be. Even now, many people in this country are not fully conscious of how desperately serious the position is. I am grateful to my hon. Friend for emphasising the point—which I had failed to do until now—that one of the worst aspects of the problem is the enormously high percentage of refugees who are drowned. Between 40 per cent. to 60 per cent. of those who set out from Vietnam fail to arrive anywhere.

Mr. Weetch: We all welcome the right hon. Gentleman's statement about our response to the problem, but is it not a short-term response? What we need is a more permanent framework of reference, so that when calamities arise, whether natural or man-made, decisions can be taken quickly. In that way we could have avoided some of the humiliating circumstances that have occurred over the past few months.

Sir I. Gilmour: With respect to the hon. Gentleman, I disagree. I do not believe that it should be taken as being the natural course of events that Governments behave in the way that the Vietnamese Government have behaved over the past year. It is something that is comparable only to Stalin's extermination of the Kulaks or Hitler's treatment of the Jews. It is not something that we should reasonably expect to occur in the future. Therefore, talks of a framework are not appropriate in this context.

Mr. Skinner: On a point of order, Mr. Speaker. I always thought that it was usual that when an hon. Member was mentioned in dispatches by the Minister concerned the opportunity would be afforded to him to say a few words. I refer to the occasion when I drew the Minister's attention to the fact that the Prime Minister—

Mr. Speaker: Order. I watched carefully what occurred on that occasion. The hon. Gentleman says that he was mentioned in dispatches, but that was because he was interrupting continually. I do not consider that to be justification for calling anyone.

Mr. Skinner: rose—

Mr. Speaker: Does the hon. Gentleman have a new point to make?

Mr. Skinner: Yes, Mr. Speaker. It is a new point. I was trying to attract the attention of the Minister in regard to the fact—

Mr. Speaker: Order. I am afraid that the hon. Gentleman cannot pursue the point that he would like to have made if I had called him. I thought that he was pursuing a point of order.

NATIONAL HEALTH SERVICE (MERRISON REPORT)

3.59 p.m.

The Secretary of State for Social Services (Mr. Patrick Jenkin): With permission, Mr. Speaker, I should like to make a statement on the report of the Royal Commission on the National Health Service.
The Royal Commission, which was set up by the right hon. Member for Huyton (Sir H. Wilson) in 1975, has presented its report to my right hon. Friend the Prime Minister. That report has been published today. Copies of the full report are available in the Vote Office and some copies have been placed in the Library.
The Government are grateful to the chairman, Sir Alec Merrison, and the other members of the Commission for the time and trouble that they have devoted to this important task. The Commission's report is long and detailed and it merits careful study. Today, I can make no more than a preliminary reference to a few of the issues with which it deals.
The Commission recommends that the administration of the Health Service should be simplified by eliminating, in most cases, one tier of management, and it recognises that management decisions should be taken at the lowest effective level.
A number of the Commission's recommendations will be costly, as the Commission itself recognises. But the Commission states:
It would be unrealistic to suppose that the fortunes of the NHS can be insulated from those of the nation".
On the question of private practice, the Commission sees no objection to a significant expansion of the private sector, provided that the interests of the NHS are adequately safeguarded. Nor does it consider the presence or absence of pay beds in NHS hospitals to be significant at present, from the point of view of the efficient functioning of the Health Service. It is, of course, the Government's policy to welcome the contribution that independent medicine can make to the health care of the nation, and we published our proposals in a consultative letter last month.
I should like to tell the House how we propose to handle the report. This report has been made to the Government, and it is now up to the Government to respond with our own proposals. On the major issues of structure and management we shall put forward proposals in a document in the autumn, and we shall invite early comments on that document from the interests affected. Subject to this consultation, it is our view that early progress is essential to simplify the structure of the Health Service and to devolve management authority to the lowest effective level.
A number of the Commission's more detailed recommendations will be studied by the Health Departments through the ordinary machinery.
Finally, this statement deals with general matters relating to the United Kingdom. My right hon. Friends the Secretaries of State for Scotland, Wales and Northern Ireland will be making separate arrangements for dealing with those recommendations which relate to their separate interests.

Mr. Orme: I welcome the first major review of the National Health Service since 1948. The Royal Commission is to be congratulated on its three-year effort. I join the Secretary of State in that respect. The Commission has produced a unanimous report, which reaffirms the basic principles that underpinned the establishment of the Health Service over 30 years ago.
I agree with the right hon. Gentleman that in the coming months we shall need to have wide public discussion and debate—and we should like a debate in the House when it resumes after the recess—on the recommendations of the Commission. In the meantime, however, I should like to pose some specific questions to the Secretary of State.
We are dismayed that the right hon. Gentleman has not accepted the Royal Commission's recommendation that there should be no change in the financing of the NHS, which is based on taxation of the whole community. Will he now give an undertaking that he will not consider any other form of financing, or insurance financing of the type headlined in the Daily Mail on Monday?
Secondly, I raise the question of the Health Services Board. I was interested

to hear what the Secretary of State had to say about the private sector. The Opposition reject any extension of the private sector in the NHS. The Royal Commission has asked the Health Services Board, which the right hon. Gentleman proposes to abolish, to monitor certain aspects of the private sector. At paragraph 18.39 of its report, the Royal Commission makes specific reference to this matter. If the board is abolished, how does the Secretary of State propose to continue this monitoring?
Now that the Royal Commission has come out against charges, will the Secretary of State reverse the increases in prescription charges and dental charges proposed in the Budget?
As to the administrative structure, I was very interested to see that the Royal Commission criticised the multi-tier structure of administration. I heard Conservative Members cheering that announcement. Of course, that structure was created by the present Secretary of State for Industry. We certainly endorse any improvement. However, we shall want to study carefully whether it is possible to establish a more democratic method of finding members and representatives for the Health Service.
Finally, is the Secretary of State aware that in regard to the public sector of the NHS the Royal Commission recommends increased financing? The previous Government had set about increasing finance. What will the right hon. Gentleman do about this, particularly following the cuts that have taken place and with the increase in value added tax and in the cost of living that will take place over the coming months?

Mr. Jenkin: The right hon. Gentleman has asked a very large number of questions.
The question of a debate is one for my right hon. Friend the Chancellor of the Duchy of Lancaster. I have no doubt that note has been taken of the point that the right hon. Gentleman made.
On the question of changing the basis of financing the Health Service, I am bound to say that the Government do not necessarily share the view of the Royal Commission that a service financed almost 100 per cent. out of taxation is the right answer. No other advanced nation has chosen to go down the same route.


We believe that we need to examine alternatives that may provide opportunities for additional finance, for more local autonomy and for more patient choice.
On the question of the extension of the private sector, I think that the House will be not a little surprised to learn what the right hon. Gentleman said—that he wants to see no extension at all. That goes a very long way beyond the policy of the previous Labour Government, under which a considerable extension of the private sector was taking place and is now taking place.
On the question of the Health Services Board, there is no recommendation by the Royal Commission that the board should remain. We published our proposals in the document on 22 June. What has happened is that our proposals have come after the Commission's report was sent to the printers. The Commission took the board and various other things as given. But we have published our proposals on that matter.
On the question of charges, I find it a little difficult to reconcile the proposal that we should eliminate all charges—which would cost about £200 million a year—with the Commission's recognition that additional financing of the Health Service will be very difficult until the economy is on the mend. It scarcely lies in the mouths of Opposition Members to criticise charges when one bears in mind that they raised optical charges twice and dental charges three times during their last period of office.
On the question of structure, again it does not really lie in the mouths of Opposition Members to criticise my right hon. Friend the Secretary of State for Industry. No fewer than four Labour Secretaries of State committed themselves, in 1976, to the proposition that reorganisation provided an improved administrative structure. What the Royal Commission has said is that there needs to be a simplification and a devolution to the lowest possible level of management, which is very closely in line with the proposals that the Conservative Party put before the electorate during the general election campaign.
On the question of democracy in the Health Service, there is one paragraph that refers to the recommendation that

50 per cent. of health authority members should be nominated by TUC unions, and the proposal is not endorsed.
On the question of finance, I have nothing to add to what I said in the debate last night, when I made the point that 60 per cent. of the squeeze that the health authorities are now facing is made under proposals that were approved by our predecessors.

Mr. Paul Dean: Does my right hon. Friend accept that there will be a wide welcome for the intention to get rid of one tier of administration in the National Health Service, and so save money, and for the intention to encourage private practice, which will bring much-needed additional money into the health services of the country generally?
Will my right hon. Friend comment on one of the important proposals of the Royal Commission with regard to disputes within the NHS? Indeed, will he go further and try to ensure that no-strike agreements are negotiated with the professional and other bodies working in the NHS, so that we do not again see the disgraceful disruption and hardship to patients that occurred last winter?

Mr. Jenkin: I am grateful to my hon. Friend. It is apparent that the main thrust of the report follows closely the lines of policy that I and my right hon. and hon. Friends have been discussing publicly during the period when we were in Opposition. There is a great deal in the report that we can endorse. That is why we are anxious to get ahead with implementation. The question of no-strike agreements, after last winter's events, has aroused great interest. This is a matter that we shall wish to carry forward in the course of our discussions with the unions and the professional bodies concerned with the National Health Service. I believe that there is a widespread desire that we should never again see a repetition of the events of last winter.

Mr. Ennals: Does the Secretary of State agree that this is an outstanding and perceptive report on the National Health Service? He has already expressed his thanks to Sir Alec Merrison. I am certain that hon. Members on the Opposition Benches want to do the same. Does the right hon. Gentleman agree with the conclusion of the report, that the National Health Service is not suffering what the


report calls a mortal disease susceptible only to heroic surgery? Will he resist the temptation that his right hon. Friend the present Secretary of State for Industry carried through, involving that sort of heroic surgery? Will he ensure that there is the maximum opportunity for all those who work in the Health Service and all in the House to discuss some of the important proposals contained in the report?

Mr. Jenkin: I am not sure how far the right hon. Gentleman is entitled to take credit for some of the points that the Royal Commission makes about the state of the National Health Service. The Commission makes the point that the National Health Service is certainly not on the point of collapse. That is the view that I believe is held by most hon. Members on both sides of the House. The Commission equally recognises that the National Health Service can no longer be described as the envy of the world—a phrase with which the right hon. Gentleman was free during his period of office.
I believe that the main thrust of the report dealing with structure will have support in all parts of the House—that we want to make sure that decisions are taken at the lowest possible level within the Health Service, that there should be the elimination of a tier of management, and that there should be a clear distinction between the planning and strategic functions of a regional authority and the operational control by local health authorities.

Dr. Mawhinney: I declare an interest as a member of the staff of one of the London medical schools. Will my right hon. Friend accept that many of us, particularly those who have had the opportunity to look at the work of the Health Service from close quarters, will welcome recommendation 108 to simplify the administrative structure? Will he give an assurance that in simplifying the structure as compassionately as possible, some of the administrative staff presently engaged will not be re-engaged and redistributed but that there will be cuts in administrative staff?
Will my right hon. Friend also give an assurance that the special position of the London teaching hospitals, with their expertise, will be safeguarded and not subjected to the same type of resource alloca-

tion working party reallocation that is true for the rest of the country?

Mr. Jenkin: It is inevitable that in the process of simplifying the structure there will be some redeployment of jobs within the Health Service. We shall need to examine with the staff interests concerned to what extent they may have to be met by legislation and some kind of a staff commission. We envisage not a major "big bang" reorganisation but a gradual process which the Royal Commission itself recommends should be spread over a period of two years from the start of the reorganisation. We wish to make sure that more of the scarce resources available to the National Health Service are devoted to patient care.
I recognise that my hon. Friend is closely interested in the question of RAWP and the London teaching hospitals. There is no future for medical education or for the London teaching hospitals if they are starved of the resources necessary to maintain medical teaching of the highest level. This applies to all teaching hospitals. The standards of excellence of British medicine depend upon a high quality of teaching. It was a short-sighted policy that at one stage looked to threaten those standards of excellence. I believe that the principle of RAWP is right and that we should seek to provide a more even balance of resources throughout the country, but this must be a process of levelling up and not levelling down.

Mr. Beith: Why did not the Secretary of State wait to read the critical report of the Royal Commission on prescription charges before putting them up? In considering removal of a tier of administration by reorganisation, will he take note of the fact that it will not necessarily be the same tier in all parts of the country that is appropriate for removal?

Mr. Jenkin: On the first point, we face the choice whether to cut services or increase charges. On the question of prescription charges, unlike my predecessor, I felt it was right to maintain the level of services but to put up charges. I believe that the House has endorsed this proposal. On the second point, the Commission makes the point that a two-tier service is, for the most part, what is necessary in the country. It will be for the health authorities, under the guidance


of regional health authorities, in each part of the country to determine what is the best structure in their part of the country.

Mr. McCrindle: Reverting to charges, does my right hon. Friend accept that, while it is possible to be opposed to charges in principle, as the Royal Commission appears to be, the practical aspect of the matter is that the abolition of charges would involve additional expenditure of £200 million or a reduction in services elsewhere? Will my right hon. Friend take on board the fact that many of us would prefer to see the continuation of charges rather than to see a reduction of services?

Mr. Jenkin: My hon. Friend has restated my own view. It is interesting to note the Royal Commission's estimate—£200 million—is made up of £140 million as loss of revenue and £60 million as the extra use of the service that will be made if there are no charges. One must question the value of some of the extra £60 million that would go on drugs about which there is already a good deal of criticism.

Dr. Summerskill: Although the Royal Commission does not consider that the present number of pay beds in hospitals is significant, will the right hon. Gentleman do nothing to encourage or perpetuate these two standards of medical care, one for those who can pay and one for those who cannot? Does he agree that the privilege of quicker treatment and privacy should be decided on grounds of clinical need and not on grounds of who can pay?

Mr. Jenkin: I am bound to say that I think that the brewery workers in the Midlands who have decided on Private Patients Plan subscriptions, as part of their terms of service, may be wiser than the hon. Lady. We have dealt with the question of pay beds in our consultative letter issued by my hon. Friend the Minister for Health; I commend it to the hon. Lady. Its proposals represent a fair compromise of most of the views expressed in this House.

Mr. Neubert: In connection with the funding of the Health Service in a time of economy stringency, do the Government recognise that there is a not unimportant part to be played at the margin between adequacy and advance by local voluntary

activity and local fund-raising appeals? Will my right hon. Friend ensure that in his response to the report the National Health Service is made sufficiently flexible to take full advantage of this potential extra popular support?

Mr. Jenkin: My hon. Friend is absolutely right. We are always prepared to discuss with health authorities and voluntary bodies the way in which voluntary funds can supplement valuably the work of the National Health Service. We are prepared to discuss in some cases the question of leasing hospitals at peppercorn rents to voluntary bodies to run themselves rather than that they should be closed.

Mr. Pavitt: May I press the right hon. Gentleman again on the question of charges, in view of the firm case which the Commission has made, on three grounds: first, the social injustice which occurs when some taxpayers pay twice, the only ones paying twice being those who have to pay when they are ill; second, the need for preventive medicine rather than curative medicine, in which also charges play a part; and, third, the economic consequences or the economic case put forward by the Commission, which shows that it is nonsense to spend so much in collecting in many cases charges which are irrelevant in relation to the total amount paid?
May I remind the right hon. Gentleman that 89 per cent. of the National Health Service cost, now amounting to £8,300 million, is paid by taxpayers, and we are talking about the margin of £200 million? Does he agree that it would be right not to do what we did, for example, on Monday this week—that is, put on charges without the House having an opportunity to pray against them? Will he accept the Royal Commission as a holding operation until such time as the House can discuss these matters?

Mr. Jenkin: There was a good deal of criticism from the Opposition Benches in the debate last night because of the squeeze on prices and on pay—partly the previous Government's decisions and partly ours—of £100 million, and the right hon. Member for Salford, West (Mr. Orme) sought to jerk our tears over the consequences of what will happen. The hon. Gentleman is now asking that we should find another £200 million to


replace the income from charges. I just have to tell him that "it ain't there". In these circumstances, I would rather keep on the charges than cut back the spending.

Mr. Burden: Will my right hon. Friend recognise that for a long time now a number of hon. Members have been saying that the National Health Service has needed a radical overhaul, and will he take it that we welcome the fact that it will now get it, but is it not true that there has been a decline in medical and hospital services over recent years? If the Opposition are now saying that money is necessary, as is the fact, where would they apply it now if they were unable to provide it over recent years to rectify the declining position?

Mr. Jenkin: I think that the evidence of declining standards in some parts of the Health Service is too serious to ignore, and the Royal Commission recognises that there are now grounds for anxiety in some services. Other services have had a low standard for many years, and the efforts of Governments of all political complexions—for instance, in trying to improve services for the mentally ill and mentally handicapped—can be shown to be producing results in many parts of the country. But the difficulty lies in the question of finance, and the Royal Commission says that we cannot separate the finance for the National Health Service from the general economic prosperity of the country. The proposals of my right hon. and learned Friend the Chancellor are set to raise and improve the economic prosperity of Britain, and the National Health Service will benefit from that in due course.

Mr. Mellish: Surely the aim of reorganisation of the Health Service is to revert to what was, I believe, the most successful feature of the service of yesteryear, which was the local management committees. These committees were not only in close touch with the staff, with the doctors, nurses and so on, but they had an importance; they mattered. But that was destroyed. Will the right hon. Gentleman see whether he can put it back? Further, will he do me a personal favour and keep this work of the Royal Commission and its report out of sight from his right hon. Friend the Secretary of State for Industry, because if that

character sees it he will destroy the Health Service again?

Mr. Jenkin: I know that the right hon. Gentleman echoes the views of a great many people both within and outside the Health Service, and it is certainly the recommendation of the report and the policy of the Government to make sure that the direction, the lay management, of the Health Service is at as low a level as is possible consistent with sound management.

Mr. Jessel: Has my right hon. Friend seen the reference in the report to the cost to the NHS of road accident casualties, which in 1977, it says, was £44 million, and to the saving in Health Service resources which would arise if there were a substantial increase in the rate of seat belt wearing? Does he agree that it will be highly relevant for hon. Members to bear that point in the report in mind when deciding how to vote this coming Friday on the Road Traffic (Scat Belts) Bill?

Mr. Jenkin: As my hon. Friend says, the House will have an opportunity to express a view on the compulsory wearing of seat belts when it votes on the Private Member's Bill to be debated on Friday.

Mr. Meacher: Is the right hon. Gentleman aware that the Royal Commission said that the National Health Service as presently financed represents good value for money and that raising prescription charges would neither make for better doctoring nor discourage frivolous use? Is he aware also that the Commission comes out strongly against any shift towards insurance-based schemes on the ground that bad risk groups who would have to pay high premiums tend also to be poor, so that either they could not pay the insurance or a two-tier system would develop between rich and poor? Will the right hon. Gentleman therefore give the answer which he did not give to my right hon. Friend the Member for Salford, West (Mr. Orme) and state categorically that the Government have no intention of moving in that direction?

Mr. Jenkin: On the contrary, I indicated to the right hon. Member for Salford, West (Mr. Orme) that the Government did not necessarily share the view of the Royal Commission on this


matter, and we believe that there could be advantages from changing the basis of financing. We intend to carry forward our studies on that in order eventually to make up our own minds on the issue.

Mr. John Wells: May we have an assurance that there will be a place for homoeopathic medicine within the restructured Health Service? Second, will my right hon. Friend assure the House that the community health councils will be restricted to dealing with their local communities and will not waffle on about generalities?

Mr. Jenkin: It has been made clear by successive Governments that homoeopathic medicine is, in theory, available on the Health Service. The problem lies in the difficulty of persuading enough practitioners to be trained in homoeopathic medicine to be able to provide a service across the nation, which certainly cannot be done at present. But I take careful note of what my hon. Friend says. As regards community health councils, it has always been my view, as was originally the intention of the legislation, that the CHCs are essentially local bodies to concern themselves with local interests in the health services in their immediate area. That is what they are there for, and I hope that they will confine their attention to it. They are by way of being an experiment, and clearly we shall need to review the future of community health councils in the newly simplified and decentralised structure towards which I hope we shall be moving.

Several Hon. Members: rose—

Mr. Speaker: Order. I propose to call four more hon. Members who have been rising to ask questions.

Mr. Clinton Davis: May I draw the Secretary of State's attention to paragraph 7.63 of the report, which refers to the urgent need for additional financial resources to be made available to improve the quality of primary care services, particularly in inner London and other inner city deprived areas? Can we really wait three months for the right hon. Gentleman to make his views known about that matter, which, as I say, the Royal Commission regards as one of the greatest urgency?

Mr. Jenkin: This is certainly a matter which is engaging my hon. Friends and myself, and clearly it is of considerable seriousness. The problem has developed over a good many years, and it would be idle to pretend that it will be put right in three months. But I must make clear that the proposals which the Government will be putting forward in a document in three months will have to do with structure, administration and management. Those are the matters which we wish to get ahead with, because it is within the new framework that we hope to secure improved services in the future.

Mr. Dover: I know that my right hon. Friend is aware of the problems in the casualty service at Chorley hospital. May I draw to his attention paragraph 10.24 of the report, where the Commission says:
We think it preferable to leave to local decision the best way of meeting the demands on accident and emergency departments.
Will my right hon. Friend make sure that the casualty departments at small hospitals, away from the larger units, are given his particular attention, especially with reference to their staffing?

Mr. Jenkin: I know that my hon. Friend has already taken his constituency problem to my hon. Friend the Minister for Health, and it is being examined. It is one of a great many local problems which hon. Members on both sides of the House are facing, and I think that it underlines the desirability of making sure that local decisions are taken as near to the ground as possible. That is our objective.

Mr. Cryer: Will the right hon. Gentleman accept that the increase in prescription charges has been levied by his Department and his Government because of their tax concessions to the rich, but will he acknowledge that the Royal Commission talks about the gradual but complete extinction of charges, and we are not talking about an immediate production of £200 million? What is his view about the gradual but complete extinction? Is he prepared to accept that, or does he wish actually to increase charges in the Health Service to force people into the private sector?

Mr. Jenkin: The truth of the financial dilemma underlying health care is that there can never be enough resources to


satisfy all needs. That has been said by every Minister of Health since the NHS started. When Ministers have been faced with the choice of cutting services or putting up charges, some have gone one way, some have gone the other and some have done both. The previous Government chose to cut services and to put up some charges. We have chosen to try to maintain services and to put up charges. I would make the same decision again.

Mrs. Dunwoody: Will the right hon. Gentleman look carefully at the recommendations on geriatric psychiatric care in the light of what is happening in my constituency and his remarks about private practice? The waiting lists get longer for NHS patients, but it is easy to get treatment under private medicine. That is not a situation which anyone can accept.

Mr. Jenkin: I am not sure that I accept the hon. Lady's view. If people are prepared to pay and therefore to bring more resources into health care, that will be to the advantage of the NHS and of NHS patients. No one has ever suggested that long-stay care in geriatric or psychiatric hospitals could be the subject of insurance or, except in a tiny minority of cases, appropriate for private care.
However, if one could release more of the resources in the acute hospitals from the burdens carried by the National Health Service by encouraging people to take out insurance and to have private treatment, there would be more resources for the underprovided—for long-stay hospital care about which the hon. Lady is concerned.

Mr. Coleman: What do the Government intend to do in respect of the structure of management of the NHS in Wales, bearing in mind that we have one tier fewer than the NHS has in England?

Mr. Jenkin: The management of the Health Service in the Principality is a matter for my right hon. Friend the Secretary of State for Wales. As I said at the end of my statement, my right hon. Friends the Secretaries of State for Wales, Scotland and Northern Ireland will be carrying out consultations in relation to their own responsibilities. My main concern in this context is for England.

Mr. Kilroy-Silk: Does the right hon. Gentleman accept that the private medical sector is necessarily parasitic on the NHS, not least, for example, in its recruitment of nurses and doctors who have been trained at public expense? Would it therefore not be appropriate for some sort of levy or tax to be imposed on the private medical sector so that the hidden subsidy could be reimbursed to the NHS?

Mr. Jenkin: I am already in discussion with leaders of the private sector of medicine to see how far they can increase their contribution, particularly to the training of nurses. That is something which the nursing organisations would welcome and which the private organisations have said that they are ready to talk about. The point raised by the hon. Gentleman is one of which I am conscious, and I think that the method that I have described is the right way to meet it.

Mr. Orme: The Secretary of State has been less than clear, to say the least, on the issue of pay beds. The Royal Commission recommended that the Health Services Board should be strengthened. The Commission supported the phasing out of pay beds. If the right hon. Gentleman is to abolish the board, who will monitor the phasing out of pay beds?
It was extraordinary that the Secretary of State's defence against the suggestion that charges should be abolished was that it would cost £60 million more. Does that not mean, therefore, that there are people who need prescriptions and are not able to get them because they cannot afford them?

Mr. Jenkin: On the first point, I must refer the right hon. Gentleman to the consultative letter that was sent out on 25 June. That made clear the Government's policy. The Royal Commission sent its report to the printers before that letter was sent out. There is no recommendation to phase out pay beds and no recommendation to keep the Health Services Board. The Commission assumed that the board would remain in existence. If, as a result of our consultations, our proposals are endorsed, the board will go out of existence. There will be one quango less. It will be the responsibility of the Secretary of State to monitor the balance between the public and private sectors. Our consultative letter made that clear.
On the right hon. Gentleman's second point, I find the attitude of Labour Members rather strange. When we debate the problems of the drug industry we are told that it is responsible for forcing large quantities of unnecessary drugs on patients who do not need them. When we impose a disincentive to that we are told that people will be deprived of care that they need. Labour Members cannot have it both ways.

Later—

Mr. Roy Hughes: On a point of order, Mr. Speaker. I do not wish to question your calling of hon. Members to put supplementary questions on the statement about the report of the Royal Commission on the National Health Service. However, if you had had the opportunity of consulting the report you would have found in the appendix that the hon. Member for Newport took the trouble to submit evidence to the Royal Commission.

Mr. Speaker: I am much obliged for the information.

ABORTION (AMENDMENT) BILL

Mr. Les Huckfield: On a point of order, Mr. Speaker. I wish to raise with you a matter concerning voting on the Abortion (Amendment) Bill which took place in the House last Friday. I apologise for not having raised the matter before, but I hope that you will accept that with no official Hansard showing the voting lists being available to hon. Members I have only just found out what happened from some of the unofficial voting lists that are appearing in the House.
I voted on the Bill, as did many other hon. Members on both sides of the House, but I have only just found out that my vote has not been recorded. I find that I am not alone in that. I understand that several hon. Members on both sides of the House have a similar complaint.
Having checked upon what happened, and bearing in mind that there was a great deal of confusion surrounding the votes, may I point out that this is an important issue, on which many hon. Members have a serious need to show their constituents which way they voted?
As representation on the Committee to consider the Bill very much depends on the outcome of the vote on Second Reading, may I ask whether it is possible—I appreciate that we are in a sort of constitutional no-man's land—that the vote could be taken again or that the various lists of the various Divisions and parts of Divisions could be published?
I know that it is an unusual situation. We do not have an official Division list. Is there any way, Mr. Speaker, in which you could rectify that position?

Mr. Speaker: I am obliged to the hon. Member for Nuneaton (Mr. Huckfield) for giving me notice that he would raise this matter. It has been referred to in correspondence from other hon. Members.
I understand from the Deputy Speaker who was in the Chair at the time that there was considerable confusion as to whether hon. Members were voting on the closure or on the main Question. That view was expressed to the Chair. The Deputy Speaker did what I would have done had I been in the Chair and what is always done in the House if there is confusion in the Lobby. The Division


was called off and was called for a second time.
I realise that a number of hon. Members who had been expressing views outside wanted the public to know that they had kept faith with what they had been saying. They were here to cast their votes. Unfortunately, when a Division is called off the list is immediately destroyed in order to avoid any misunderstanding arising. We keep only the list of hon. Members who take part in the official Division.
The Deputy Speaker and I wish that we could help hon. Members who stayed for the whole afternoon in order to cast their votes but who left in a hurry, understandably, after the first vote. It was a Friday afternoon, when many hon. Members have engagements in the country. However, I fear that I cannot help the hon. Gentleman any further.

Mr. Huckfield: Further to that point of order, Mr. Speaker. I am grateful for what you have said and I do not, of course, cast any reflection on you or your colleagues in the Chair. It is not that sort of matter.
It is a serious matter and one on which hon. Members are under great pressure from all sides in their constituencies. We are in an unprecedented situation, because there is still no official voting record. Is it not possible to amend the unofficial lists that are appearing in the Library and other places? I know that those are unofficial lists, but, if they are unofficial, surely some of the parts of the other Division lists could be made available unofficially.
Not only was there a false start to the vote on the closure; a point of order was raised during the main vote, so that there were three attempts at voting.

Even if it is not possible to produce any kind of official or unofficial recollection of what took place, Mr. Speaker, is this a matter that you feel is in your power to bring to the attention of the Committee of Selection, so that it may have it in mind when it makes up the composition of the Committee?

Mr. Speaker: I think that the last point raised by the hon. Gentleman is a substantial one, which will be borne in mind by those responsible. There is no doubt that due to anxiety to get to constituencies hon. Members did not come back to hear the result of the Division in order to know that all was well. I am sure that the hon. Gentleman's point will be borne in mind.

PARLIAMENTARY PAPERS

Mr. Joan Evans: I wish to raise a point of order that is in one way connected with the previous point of order, Mr. Speaker. One of the difficulties of checking the records is the non-publication of parliamentary papers. Is the Leader of the House in a position to make a statement about the resumption of publication?

The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): Further to that point of order, Mr. Speaker. Perhaps it would be of assistance for me to say that I am happy to be able to tell hon. Members that, thanks to the unremitting efforts of my right hon. Friend the Minister of State, Civil Service Department, a more accommodating attitude on the part of the unions and some discreet encouragement from the Leader of the House, parliamentary papers will be printed as normal tomorrow.

VAGRANCY (AMENDMENT)

4.43 p.m.

Mr. John Fraser: I beg to move,
That leave be given to bring in a Bill to amend Section 4 of the Vagrancy Act 1824.
The effect of the Bill will be to abolish what has come to be known as the offence of "sus", which has caused deep concern to parents, to youth workers, to local authorities, to civil liberties supporters and, not least, to Members of the House of Commons over a period of 150 years.
The offence is found in the Vagrancy Act alongside such offences as telling fortunes, lodging abroad in a tent, and exposing one's wounds in order to obtain alms. It consists not of committing a crime or even of attempting to commit a crime, but of
frequenting or loitering in a place of public resort with intent to commit an arrestable offence".
It is punishable by up to three months' imprisonment.
The Vagrancy Act 1824 was born in the distress and unemployment that followed the Napoleonic wars. Section 4 is not mainly about suppressing crime; it is about suppressing the symptoms of poverty. It sits in the statute book next to an Act on the transportation of prisoners. I do not oppose it on the grounds of antiquity, although its context puts it under suspicion. Within a matter of months of the Act's being passed, that famous radical, Joseph Hume, was protesting, on 10 February 1824 in this House, that it was an interference with the liberty of the subject. It therefore had its critics within months of its becoming law.
I oppose it not on the grounds of its antiquity but because of the grossly unsatisfactory nature of the offence of being a suspected person. I shall try to make up a case against it.
First, exceptionally for English law, the essence of the offence is being around in a public place and having a particular state of mind. If most people's thoughts constituted an offence, there would be very few innocent people in this country. As the Home Office working party put it,
It falls short of any criminal offence or attempt to commit an offence.
Lord Gardiner, the former Lord Chancellor, put it more strongly. He said:

I must say that I myself find it very difficult to equate this law with the Rule of Law at all.
What began as a suppression of the symptoms of distress and poverty has become an offence against civil liberties.
Secondly, not only is this a dubious offence; the defendant can never test the charge against him before a jury. He can be placed in serious jeopardy and can have a career blighted, but he will have no chance of appealing to his peers as to whether or not he is guilty.
Thirdly—I do not say this in criticism of the police—the evidence against the defendant is almost invariably given only by police officers. It is uncorroborated by a member of the public. Of course, if the House of Commons creates an offence someone is bound to be guilty of it at some time. However, so effective is this charge that there is always the risk of innocent people being convicted, and there is certainly a situation in which the guilty usually believe themselves to be innocent. I believe that it injures the reputation of the police, which is why many police forces do not choose to prosecute under this section of the Act. I believe that it injures their relations with the public, and effective policing depends upon confidence in the police and co-operation between them and the general public. I therefore believe that both public co-operation and the reputation of the police stand to gain from the repeal of this offence.
In my constituency some parents are afraid to send their children out shopping for fear of arrest. Their fears may well be exaggerated, but they are a fact of life and they must be reckoned with.
In London, a substantial proportion of those arrested are black. In one age group the figure is about three-quarters. That figure is wholly disproportionate to arrests of black people generally. I do not argue abolition on the ground that this is a "black" offence, but, given the suspect nature of the charge and the allegations that I have already made against the offence, and given that proportion of arrests, there is another strong reason for abolition of the offence.
The enmity that is felt by many young black people towards the police ought to and does cause us a great deal of concern. It caused the working party a great


deal of concern, and I believe that the offence of "sus" was largely responsible for that. It is so unsafe that it makes every story of injustice a credible story because of the way in which the offence is phrased.
I know the argument against repeal. It is that "sus" is a useful crime prevention measure—and it is. So is a curfew, so is the suspension of habeas corpus, and so are many other measures. That, therefore, is not a very good argument. If the offence were not on the statute book, nobody would dream of inventing it. However, once it is known that something exists, no end of people are prepared to rationalise its continuation. The question about prevention is an important one which is not to be neglected.
I think that the answer lies, as some police forces already show by their practice, in charging with attempted theft if the evidence supports that charge, or in the use of a useful prevention provision that exists in the Criminal Justice Act 1967. There, no charge is involved, but a person who is suspected of being about to commit an offence can be arrested and bound over to keep the peace for a period of up to a year.
Sometimes a mere caution or a few wise words with the person involved, or his or her parents, would be equally effective. I regret that the policy in the Metropolitan area is one of charging forthwith with this offence without thinking about

a caution or of some other method of looking into the matter.
My argument amounts to this: we can continue to have the rule of law and to support it. We can have increased confidence in the police and the legal system, and we can prevent crime while at the same time we can abolish "sus". That is what I seek leave to do.

Question put and agreed to.

Bill ordered to be brought in by Mr. John Fraser, Mr. John Tilley, Mr. Stuart Holland, Mr. Alexander W. Lyon, Mr. Arthur Davidson, Miss Jo Richardson, Mr. Andrew F. Bennett, Mr. Greville Janner, Mr. Stan Thorne and Mr. John Sever.

VAGRANCY (AMENDMENT)

Mr. John Fraser accordingly presented a Bill to amend section 4 of the Vagrancy Act 1824: And the same was read the First time; and ordered to be read a Second time upon Friday 9 November and to be printed [Bill 45.]

BUSINESS OF THE HOUSE

Ordered,
That the Third Reading of the Finance Bill may be taken immediately after the consideration of the Bill notwithstanding the practice of the House as to the interval between the stages of Bills brought in upon Ways and Means Resolutions.—[Mr. Peter Rees.]

Orders of the Day — FINANCE BILL

As amended, considered.

Ordered,
That the Finance Bill, as amended, be considered in the following order—

(a) new clauses;
(b) amendments relating to clauses 1 to 11 schedule 1, clause 12, schedule 2, clause 13, schedule 3, clauses 14 to 23, schedule 4, clause 24;
(c) new schedules; and
(d) amendments relating to schedule 5.—[Mr. Peter Rees.]

New Clause 4

COMPENSATION FOR DELAY IN NATIONAL SAVINGS PAYMENTS

(1) There shall be disregarded for all purposes of income tax, corporation tax and capital gains tax any sums paid by the Department for National Savings as compensation for delay in making any such payments or repayments as are mentioned in subsection (2) below, being delay attributable to industrial action by staff of the Department between 22 February 1979 and 4 May 1979.

(2) The payments and repayments referred to above are—

(a) payments of dividends or interest on stocks and securities registered on the National Savings Stock Register;
(b) repayments of national savings certificates;
(c) repayments of contributions, and payments of bonuses or interest, under certified contractual saving schemes as defined by section 415(2) of the Taxes Act;
(d) payments of premium savings bond prizes and repayments of premium savings bonds;
(e) repayments of money deposited in the National Savings Bank.

(3) This section does not affect the tax treatment of interest to which a person is entitled under any express provision in that behalf contained in the terms of issue of any such stock, securities or certificates as are mentioned in paragraph (a) or (b) of subsection (2) above, in the conditions applying to a contract made under any such scheme as is mentioned in paragraph (c) of that subsection or in the National Savings Bank Act 1971.'.—[Mr. Peter Rees.]

Brought up, and read in First time.

4.51 p.m.

The Minister of State, Treasury (Mr. Peter Rees): I beg to move, That the clause be read a Second time.
The new clause is designed to exempt from tax, whether income tax, corporation tax or capital gains tax, various payments of recompense made to the holders of a number of Government stocks. The basis of the clause is that unfortunately between 23 February and 3 May this year industrial action affected two computer centres. Those who held national savings certificates, save-as-you-earn contracts, deposits for the National Savings Bank and premium bonds were not able to withdraw interest to which they were entitled or to recover the capital.
The Financial Secretary, in answer to a parliamentary question on 13 July, announced that the Government thought that it was fair and right, whatever the precise legal position, that there should be recompense for such people. The recompense is to be interest at the rate of 17 per cent. on all delayed payments other than delayed payments of premium bond prizes. In those cases the recompense is to be calculated at the rate of 8 per cent. per day.
The reason for the difference is that in the other cases the holders may have experienced financial inconvenience. They may have made their calculation on the basis that they would obtain interest or capital and they may have had to refinance themselves in other ways. Since holders of premium bonds could not have anticipated receiving a prize, it is unlikely that they would have been put to any financial inconvenience. At that time my hon. Friend made no announcement about the taxability of those compensation payments. On reflection it was thought that there might be a liability to tax, although the question is by no means clear. However, the Government believe that the payments should be exempt from tax.
That is the basis of the new clause. The precise payments or repayments which are to be subject to this exemption are set out in subsection (2) of the new clause. The total tax involved is likely to be about £500,000. It is believed that there will be about 2½ million payments, of which only about 300,000 will involve more than £1. Considerable administrative complications would be created if those small payments were swept into the tax net.
On the grounds of administrative simplicity and general fairness, we thought it right to introduce the new clause. I commend it to the House. It is simple, clear-cut and fair. I hope that it will attract support from both sides of the House.

Mr. Denzil Davies: We welcome the new clause and the reasons for it. We welcome the compensation payments which the Government have agreed to make as a result of the unfortunate strike earlier in the year. We have no quarrel with the way in which the Government have gone about deciding on the compensation payments. It seems to be fair and right. I hope that we should have done the same had we been in office.
The new clause is consequential on the Government's decision. I do not wish to prolong the debate, but perhaps the Minister of State can clarify the position. If compensation is paid in respect of income, and that income is taxable, why should not the compensation be taxable? Why should not compensation in respect of capital payments be subject to capital tax? I am not arguing against the clause but seeking a clearer explanation.

Mr. Tam Dalyell: I understood the Minister of State to say that £500,000 and 300,000 people are involved. I realise the difficulties of simplicity, on the one hand, and equity, on the other, but this seems to represent an extra administrative burden on the Revenue. If there are more industrial problems at Inland Revenue centres, how much extra work will it involve? I speak as one who has a great deal to do with the computer centre at East Kilbride, in my constituency.
I have the highest regard for what that tax centre does and for the speed with which the staff reply to letters. It is often said that tax offices take a long time to reply to Members' letters. That is not my experience. I have the highest regard for the tax office with which I deal most. I am sure that most of my Scottish colleagues will agree that the East Kilbride centre has justified itself.
In this context, £500,000 is a relatively small sum. How much is involved administratively? It is fair to ask that question since the Inland Revenue is overburdened and since complaints have been made by the Inland Revenue Staff Federation.

Mr. Peter Rees: I am happy to respond to the right hon. Member for Llanelli (Mr. Davies) and the hon. Member for West Lothian (Mr. Dalyell). The right hon. Gentleman asked me why the recompense is not to be taxed since the capital repayments of the original stocks may have been subject to capital gains tax and the income payments were, in most cases, subject to income tax. Such an arrangement makes for administrative simplicity. There will be many small payments. To sweep them into the tax net would impose an unjustifiable burden on those who receive them and upon the Revenue machine.
The principle behind the provision is that many people will have been disadvantaged financially and may have had to borrow money on which they had to pay interest. Such people would not be able to obtain relief under the existing income tax system. That would not apply in all cases, but we think that it is better to err on the side of generosity. I hope that the House agrees with the Government's approach.
We could have attempted to distinguish between those who were subject to tax and those who were not, or between those who could obtain relief and those who could not. The disadvantage was imposed on those who hold such Government stocks through no fault of theirs. It is right for the Government to err on the side of generosity. Governments are not always able to take that broad and proper approach. I hope that the House will approve of what we have done.
5 p.m.
I am sure that those who work in the Inland Revenue will be pleased to read the comments of the hon. Member for West Lothian on the workings of the East Kilbride office, especially as they come from such a well-informed and practised individual. The hon. Gentleman's plaudits will be much appreciated.
I am sure that the hon. Gentleman will realise that it is difficult for me to make a forecast. Much depends on the precise areas in which and the periods when industrial action takes place. We are all speculating. For example, there would have to be overtime to catch up with a backlog. It is right to take into account the disadvantage and inconvenience to members of the public. These matters


are all rather speculative against my hope and expectation that industrial action will not take place in Revenue and Revenue-related areas.
If the hon. Gentleman chooses to table a question or to write to me, I shall endeavour to give him a fairly precise estimate. I hope that what he envisages will not come to pass. I think that he will agree that this is a somewhat speculative area and that it is difficult for me to give him the precise answer that he is entitled to expect. If anything of the sort should happen again, we shall want to ascertain where the administrative burden is greatest and where the burden on the general public is greatest.
I hope that the House will feel able to accept the new clause.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 7

EARNINGS FROM WORK DONE ABROAD (AMENDMENT OF FINANCE ACT 1977)

'In Schedule 7 to the Finance Act 1977 there shall be inserted at the end:—

12. For the purposes of this schedule section 184(3)(a) (duties of any office or employment under the Crown treated as performed in the United Kingdom) shall not apply to any duties performed outside the United Kingdom if in respect of the period which those duties were performed the person performing the duties was not entitled to an allowance to which section 369 of the Taxes Act applies. In applying this paragraph any area designated under section 1 (7) of the Continental Shelf Act 1964 shall be treated as part of the United Kingdom".'.—[Mr. Hal Miller.]

Brought up, and read the First time.

Mr. Hal Miller: I beg to move, That the clause be read a Second time.
This is in some senses a re-run of an effort made last year to remedy an anomaly from which civil servants are suffering. I should declare an interest because I am the honorary adviser to the First Division Association of the Civil Service.
The anomaly arises from the Finance Act 1977, which purported to give some tax relief to those who it was thought were exporting for the country and who needed some recognition in a tangible form of their arduous efforts and the uncomfortable conditions often encountered. However, there were others similarly affected

by that tax offset provision. I am referring not to the 100 per cent. relief for those who spend 365 days a year abroad but to the 25 per cent. relief for those who clock up 30 days or more in one year.
As a result of what was enacted—I do not think that it was intended—there is a unique discrimination against civil servants whose tasks take them abroad. Relief has by no means been confined to those engaged in the export trade. It is extended to those attending conferences. Therefore, it is given to professionals, trade union officials or anyone else who spends the requisite 30 days a year abroad. It is noteworthy that ships' crews and airline pilots were put in the same position under section 181 of the 1977 Act. They were relieved in schedule 7. That is exactly what this rather tortuous clause is seeking—to put civil servants in the same position.
The language of the clause is admittedly obscure, but I hope that I have made plain its intention. I hope that I have also expressed the feeling of discrimination that arises when civil servants, for instance, attend international conferences on Government business and find themselves disadvantaged compared with others on the same conference delegation.
In the similar debate that took place last year I made the suggestion that the Civil Service Department should review eligibility for the foreign service allowance. There is no question of the civil servants uniquely discriminated against in this context trying to obtain double benefit. There is no question of them being able to obtain the foreign service allowance and tax relief. That was an objection raised by the previous Government. That is why the clause appears today in a different form.
I hope that the intention is clear. I believe that the object is honourable and I hope that my hon. and learned Friend will be able to give an indication that the issue is being sympathetically considered, however it is finally to be treated.

Mr. Peter Rees: I respectfully congratulate my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) on the way in which he moved the new clause. I should not describe the clause as tortuous, but equally I should not say that it is lucidly clear. It is referential and one has to return


to the original clauses. For those of us who have to apply ourselves to amendments, new clauses and original clauses, the intention of the new clause is clear. I accept that the intention is entirely honourable.
As my hon. Friend has reminded the House, there was a somewhat similar new clause debated last year. I recall my hon. Friend's intervention and that of the hon. Member for Thornaby (Mr. Wrigglesworth). It was on that occasion that the former Financial Secretary was privileged to reply. I am not certain whether the debate has moved a great deal since last year, elegant though the Financial Secretary's reply was. I shall try to approach the problem with a fresh eye and in a fresh light. The context is now rather different, as I hope my hon. Friend and the House will recognise.
Last year the extension of the relief was to depend on the receipt or non-receipt of overseas allowances; this year my hon. Friend proposes that it should depend on eligibility. He mentioned those who are disadvantaged in that they cannot take advantage of either the 100 per cent. relief which is conceded to those who spend 365 days in a year abroad or the 25 per cent. relief if they spend 30 days abroad. The disadvantaged are not only civil servants. Ministers of the Crown are similarly disadvantaged, although Members of this honourable House are not. Whether hon. Members would feel it consistent with their duty to their constituents to spend as many as 30 days abroad I leave to their consciences. I am aware that in my present position I should be unable to spend 30 days abroad. That demonstrates that the problem is slightly wider than my hon. Friend suggested. I did not consider the new clause with any more or less sympathy on those grounds.
The difficulty that I find this year is that the rates of direct taxation have been reduced. As for the 25 per cent. reduction, it is right to speculate whether it is correct to encumber the statute book with a variety of small reliefs that are always difficult to calculate and administer. I have no concluded view on that, but I ask the House whether it is right that we pursue this sort of relief and extend its scope against the background of reduced rates of tax. I remind the

House that my right hon. and learned Friend said in his Budget speech that we hope that this is only the first of many tax-cutting Finance Bills to be introduced by the Government.
Against that background I am diffident about saying to my hon. Friend "Yes, we shall consider the clause sympathetically." I am moved to recall that my hon. Friend said in the similar debate last year that he was not wholeheartedly in favour of the present system. That happened against a background of higher tax rates. My hon. Friend's reservations on that occasion are more acute now.
We shall review the question, although I cannot give my hon. Friend any commitment that we shall come up with a sympathetic answer. We have taken his point on board, I hope that hon. Members will reconsider their attitude, position and and approach to the problem against the altered fiscal climate that I hope the Finance Bill has engendered. I congratulate my hon. Friend on raising a worthwhile point in ventilating the matter again. I hope that what I have said will commend itself to the House and that my hon. Friend will feel able to withdraw the new clause.

Mr. Dalyell: I have heard strong comments from one or two of those involved who feel aggrieved. I do not understand why the Minister cannot make up his mind. If he said that there was no case, some of us would understand that. Equally, if he admitted the case made by the hon. Member for Bromsgrove and Redditch (Mr. Miller), we should equally understand that. Why does the Minister need extra time to review the matter? Surely the case goes either one way or the other—either those involved are disadvantaged or they are not. Which is it?

Mr. Rees: I accept the hon. Gentleman's reproof. Perhaps there was not sufficient precision or starkness in my reply about the disadvantaged. The class of Crown servants, other than Ministers of the Crown, to which my hon. Friend referred are not totally disadvantaged. They receive tax-free allowances from the Government to cover their extra costs. In contrast with people working in the private sector, they are rarely, if ever, liable to another country's taxes. To give a direct answer, they are not totally disadvantaged.
I concede that they do not receive the tax reliefs given to those in the private sector if they are abroad for the requisite period. Equally, they have some compensating advantages.
I was not disposed summarily to brush aside the new clause—I have never done so with any of my hon. Friend's new clauses—because my hon. Friend made a genuine point. Although there is force in some of the arguments, the disadvantages in this matter, such as they are, under which civil servants labour diminish every year that a Conservative Administration are enabled to bring down the rates of direct taxation.

Mr. Dalyell: I do not want to weary the House with this matter. I heard complaints from people I sat next to on the aircraft to Brussels from time to time when I attended committees of the European Assembly. I understood that they had to make arrangements where they should be—either in the United Kingdom or outside—according to their tax position. It is absurd that busy people should have their itinerary determined by whether their tax position fits special circumstances. They may be unusual eases and not exactly related to this matter. That is why I asked the question.

5.15 p.m.

Mr. Hal Miller: I must apologise for returning to the subject before we reach a conclusion. I was much happier with my hon. and learned Friend's earlier remarks than with his later ones, which carried an echo of the previous Minister's comments that led me to suppose that he had not fully appreciated the position. I was given to understand that those whom I had in mind were not eligible for the tax-free allowance. I refer to the foreign service allowance.
I shall not go into the rigmarole of how people are decreed to be United Kingdom-based under section 184(3)(a) whereas ship and aircraft crews are covered by section 184(3)(b) of the Taxes Act. They were given the relief under schedule 7. Therefore, a clear precedent was established for what I proposed. I thought that there was a definite point to be made.
Those involved represent the interests of the country abroad. No one suggests that the interests they represent are any

less than those of exporters. However, they find themselves in a totally different financial position from other people in the same delegation at a conference, for example, who come from a nationalised industry or profession. That is an unfortunate position.
I appreciate the Government's attempt to reduce taxation and the fact that the first steps have been taken. Philosophically, I am opposed to reliefs of this kind. When I had the privilege to be a member of a parliamentary delegation abroad I was given to understand by embassy officials that business men were spinning out their trips unnecessarily—to the inconvenience of the embassy—to take advantage of the tax relief.
An industry has sprung up in the form of business conferences abroad to enable business men to qualify for the relief. That is far from the original activities that were supposed to be covered. Indeed, I would cast a suspicious eye on the relief. I would much rather have an amendment—which I was not privileged to be able to put down—removing the relief altogether. However, as the relief is there and is established, and as it discriminates uniquely against civil servants, I take in good spirit my hon. and learned Friend's remark that he will review the matter. His predecessor failed to review it, although he gave an elegant undertaking to do so.
On my understanding of my hon. and learned Friend's remarks, I leave the matter there for this year. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 8

RELIEF FOR PREMIUMS UNDER RETIREMENT ANNUITY CONTRACTS

'(1) Sections 227 and 228 of the Taxes Act (which prescribe limits subject to which relief is available for premiums paid under approved retirement annuity contracts etc.) shall be amended as follows:—

(a) in subsections (1A) and (1C) of section 227 and subsections (1) and (4) of section 228 for "£3,000", wherever it occurs, there shall be substituted " £4,500";
(b) in subsections (1B) and (1C) of section 227 for "£1,000" wherever it occurs, there shall be substituted "£1,500" and


(c) in the Table in subsection (4) of section 228 for the first and second columns there shall be substituted



"Year of Birth
Sum


1937 or 1938
£5,400


1935 or 1936
£6,300


1933 or 1934
£7,200


1931 or 1932
£8,100


1930 or any earlier
£9,000 "

(2) This section does not affect relief for any year of assessment before the year 1979–80.'.—[Mr. Richard Wainwright.]

Brought up, and read the First time.

Mr. Richard Wainwright: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Bernard Weatherill): With this it will be conventient to take new clause 9—Approval of contract for dependants or for life assurance.

Mr. Wainwright: The new clauses relate to a significant limitation on the amount of provision that self-employed people, as distinct from those working for or directing companies, can make for approved retirement annuity contracts to provide pensions for their retirement.
I am sure that the Government will welcome proposals that tie in so closely with those that their spokesmen pressed hard, eloquently and reasonably upon the previous Government affecting the self-employed, who received such a generous share of attention in the Conservative Party election manifesto. The self-employed will otherwise suffer this year from the absence from the Finance Bill of alterations and adjustments to various maxima expressed in terms of money.
I can well understand the Government wanting to keep this year's Finance Bill short, but that involves the rather unfair advantage to the Government of overlooking the enormous change in the value of money, which has put completely out of date maximum limits, such as the ones I am now discussing and wish to amend, in respect of self-employed people. It would be very unfair, simply because of the brevity of the Finance Bill this year, if these crippling limits were to remain unchanged.
I should in fairness add that the previous Administration—at any rate in their later years, when they had some additional political assistance—had a rather good record in uplifting these

maxima in a fair manner to correspond with the rate of inflation. The figures that we seek to amend in new clause 8 were adjusted in the Finance Act 1976 and also in the Finance Act 1977, so that the Revenue was not unfairly taking advantage of inflation to depress people's provision for their old age. It would be a great shame and a very backward step if, the previous Administration having attended to this matter in 1976 and 1977, the new Administration were to start their career on the bad note of neglecting these adjustments for 1979.
The main proposal is that the upper limit on the amount that a self-employed person is allowed to contribute per year for his pension, with tax relief, should be uplifted from a maximum of £3,000 to a maximum of £4,500 a year. This ties in reasonably with the history of this matter since 1971, for example, when the maximum earning level for this purpose was £10,000 a year, at a time when the average earnings in the country were approximately £30 a week. Average earnings are now approaching £90 a week, and therefore an increase of the size suggested in the new clause seems to be in line with the accumulated rate of inflation since then.
By the same token, it is also necessary to have an upgrading of the figures for those who can start contributing to their retirement pension as self-employed people only at a relatively late age. This is a historic provision which is obviously fully justified and ought to be kept up to date. The original provision, when the system was introduced in 1956, referred to people born before 1916, and the whole procedure has been kept up to date on the basis that people who start contributing to their pension at the late age of 40 are entitled to higher maxima. The new clause simply uplifts these maxima in accordance, roughly speaking, with the rate of inflation since the last adjustment in 1977.
It is important for the House to be good enough to note that it is only the self-employed nowadays who are subject to maxima of this kind. Even controlling directors of companies, who are the nearest species alive to a self-employed person, and who are very often at liberty to fix their own pensions, are no longer subject to any maxima, so that we are dealing here with the only significant


group for pension purposes who are subject to a maximum that they can put away in order to provide for their old age. Since they are the only people in this category, it would seem to me to be very unfair and unreasonable to penalise them—I am sure it is not the wish of any section of this House—by maintaining these maxima at unrealistically low levels.
I am sure that the House would wish to bear in mind the obvious fact that many self-employed people—either building up a business of their own or building up a professional practice—have some very hard early years in which it is so important to plough back every penny into the business that they often have no opportunity to put money by for annuity contracts. It is often relatively late in life that self-employed people, compared with employees, sometimes have the chance to start building up a pension fund for themselves. It is all the more important that the maxima to which they are restricted should not be allowed to fall behind unfairly simply due to the silent progress of inflation. New clause 8 is proposed in order to seek to update those figures.
New clause 9 is designed simply to try to introduce some equity for the self-employed as compared with employees or even directors or controlling directors of companies. Those in a company scheme can have a very generous amount of lump-sum death benefit made available in a form which will entirely avoid capital transfer tax at the time at which it is paid. But self-employed people—in what I think must be simply a neglected hangover from the old days of estate duty, now gone—are subject in their annuity contracts to the requirement that the lump sum on death shall be payable to the personal representatives. This very often means that the benefit, before it passes into the hands of those for whom it is intended, may suffer capital gains tax. This is an inequity—no doubt unintended—which is unfair on the self-employed. It is something which I am sure no section of the House would wish to inflict.

Mr. R. A. McCrindle: My interest in matters relating to insurance and pensions is well known to the House, Mr. Deputy Speaker, but to keep in order perhaps I should start

by declaring an interest as the parliamentary adviser to the British Insurance Brokers' Association.
I want to make a very short speech broadly in favour of the proposition which has just been made by the hon. Member for Colne Valley (Mr. Wainwright). It is not more than a few weeks since, irrespective of party, we were all making speeches in our constituencies in the interests of the self-employed, pointing to ways in which they are disadvantaged in comparison with those who have a growing range of fringe benefits from their employers. I cannot but echo the sentiments of the hon. Gentleman that in many ways the self-employed continue to be dealt with in a very unequal fashion in regard to pensions.
Put quite simply, the new clause calls for a better deal for the self-employed. It is in that spirit that I should like to endorse it and to call upon my hon. and learned Friend the Minister of State in his reply to give serious consideration to accepting it.
I accept straight away that any reference to a person who is able to invest £4,500 a year in a pension scheme is liable to lead to rather less sympathy perhaps than in many ways is justified. But many of the people to whom the clause would particularly refer have a very short period of high earnings. In those circumstances, every encouragement should be given to them to provide—sometimes over a very short period—for the pension for which the rest of us usually have a working lifetime to provide.
Because of the variable earnings and the short period over which these high earnings take place, there is a case for introducing a figure of the sort proposed in the new clause. But, because it is such a high percentage increase that is proposed, I would not be unprepared to listen to an alternative proposition from the Minister, indicating that he is with us in spirit and in principle, even though the Government do not feel able to go the whole way to the figure of £4,500.
I believe that there is a strong argument for indexing the amount that the self-employed can invest in pensions. I agree that the self-employed have been


treated rather differently and, on the face of it, less fairly in the matter of making provision for their pensions. While I doubt whether I would go to the stake in the interests of the new clause, I hope that the Minister will be able to reassure me sufficiently that at least he is with us in spirit. If he cannot accept the new clause as such, I hope he will be prepared to consider accepting something broadly similar, albeit with a lower figure than the one proposed in new clause 8.

5.30 p.m.

Mr. Peter Rees: The hon. Member for Colne Valley (Mr. Wainwright) has certainly identified two problems which deserve the closest and most sympathetic consideration. I give him that most unreservedly. I find his role as a champion of the self-employed a little odd. However, we are all entitled to assume roles in the course of our debates. I know that the hon. Gentleman is a very distinguished member of a liberal profession, and while his approach is not novel it is perhaps a little new-found.
I think that I am entitled to remind the House that during the course of our Second Reading debate the hon. Member for Colne Valley was diffident about bringing down the higher rates of tax, which must have some bearing on this problem. He said that although the Liberal Party was in favour of bringing down the rates in principle, 70 per cent. was low enough at this time and that the Gothic nightmare—to recall the graphic phrase, which I remember with pleasure, of Mr. John Pardoe—should be altered brick by brick rather timorously over the years. The hon. Gentleman has now cast his timidity aside and evidently we are to have something bold and decisive for the self-employed.
I must declare a former interest, because I ceased to be self-employed only on 8 May. Indeed, I say quite candidly to the House that I have contributed to retirement benefit schemes. Therefore, I am certainly with my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) in spirit and I recognise the long, consistent and honourable contribution that he has made to these debates—much longer, dare I say, than the hon. Member for Colne Valley. The hon. Member for Colne Valley may have been with my hon Friend in spirit but he was not quite so evident about it. I am

deeply conscious that I have contributed to debates on this subject over the years when in Opposition.
I come back to the general principle. I am not here to score partisan points, as I am sure the hon. Member for Colne Valley will recognise. I hope that we shall find a broad measure of agreement. Indeed, I am waiting for a contribution from the Opposition Front Bench on this subject.
There are two problems here. I take the smaller and more technical problem first, the one exhibited by new clause 9. If the new clause tabled by the hon. Member for Colne Valley were accepted, it would enable a person who had embarked upon this course to designate that the sum should be paid not to his personal representatives but to some other nominated person. We could debate whether that might enlarge the limits too far. It might be that the hon. Gentleman could be rather capricious, but that is his right.
However, it does not automatically follow that because someone else is nominated the sum will necessarily escape capital transfer tax, although it is very likely because it will probably be within the normal reliefs of which a person can take advantage. It is also very likely, but not inevitable, that if the sum is paid to a personal representative and forms part of the estate it will be subject to capital transfer tax. Therefore, this is a problem to which we must return.
The original restriction was introduced—I must confess I cannot now recall whether it was introduced by the previous Administration or an earlier Conservative Administration—and the underlying concept in those happy far-off days was that retirement annuity schemes for the self-employed, or for others, should not be more advantageous than top hat or general pension arrangements for the employed. The balance has now swung the other way.
The reason why the walls of Jericho do not collapse at the first clap of the trumpet of the hon. Member for Colne Valley is that there are one or two technical defects. I never like to make that particular point, because it is much better that we should debate on the question of principle. But there would certainly need to be consequential amendments to, for example, section 226(2)(c) and 226(6) of the


Income and Corporation Taxes Act 1970. I am sure that, as an accountant, the hon. Member for Colne Valley will recognise that it would be necessary to tidy up those points.
Therefore, even if we were disposed to accept his arguments in toto—as I say, I find myself very much in sympathy with them—I do not think that we could accept the new clause. This is certainly an area to which we shall return in future Finance Bills and I hope that the hon. Gentleman will understand the reasons that lead me to ask him not to press that proposal to a Division.
I turn now to new clause 8, which raises a point of wider principle. I accept the arguments of the hon. Member for Colne Valley but may I correct him on one point? I hope that I shall not be thought to be too pernickety on this. In fact, the retirement annuity provisions are not limited to the self-employed, although the self-employed, on the whole, are more able to take advantage of them. There are those for whom there are no pension arrangements, and I am sure that my hon. Friend the Member for Brentwood and Ongar will know of such cases. This is not entirely what I would call a charter for the self-employed.
We recognise, and I hope that Opposition Members recognise, that the self-employed have not been protected to the same degree as those who have had the advantage of pension schemes, particularly inflation-proof schemes, over the last few years when the ravages of inflation have made intolerable inroads into the provision made for retirement. We recognise that the limits imposed—even the increases that were permitted—did not adequately offset inflation. We certainly recognise that something needs to be done. I doubt whether this new clause is comprehensively satisfactory.
Various points have been pressed on the House on different occasions—indeed, on this Administration since we took office. For instance, there is the question whether unused relief should be carried forward and whether retirement annuity contracts could be topped up by some considerable payment in the last year before retirement. So there are other problems that will need to be tackled.
I say to the hon. Member for Colne Valley, indeed to the whole House, if it is necessary to do so, that I hope that I have demonstrated clearly that we are with them in spirit. I do not think that my hon. Friend the Member for Brentwood and Ongar will need to go to the stake on this issue. Whether the hon. Member for Colne Valley has a martyr complex, I do not know. He and his hon. Friends must be forgiven for their consciences. I hope that, at the end of the day, and in the light of what I have said, they do not have to go to the stake either.
I am certainly prepared to give the assurance that the Government will review this matter sympathetically. I am sure that the House will recognise the constraints that were imposed on the present Administration when putting together a Finance Bill in such a very short space of time. I am also sure that the House would not have been sympathetic if the Bill had run to 64 clauses and seven schedules. Even the Liberal Party would not have wished to stay to debate those measures into August.
The Government will certainly come back to this matter with a sympathetic approach, and I hope that on that basis none of us need feel obliged to go to the stake or demonstrate our sympathy or commitment. I am sure that this debate has demonstrated that there is a broad measure of agreement and that the Government will look again at these problems.

Mr. Richard Wainwright: If the House will tolerate it, I should like to take a moment or two to reply to the speech of the Minister, which I thought was a very strange mixture.
After I had been at pains to introduce a clause which I felt had no particular party label and would receive sympathy from all quarters, the Minister felt constrained to cast extraordinary doubts on my qualifications and those of my party as defenders of the self-employed. I am surprised that the Minister was not immediately corrected by the hon. Member for Maldon (Mr. Wakeham), who shared with me the hardships of a Sunday morning in Blackpool addressing the National Federation of Self-Employed Limited, submitting ourselves to the whips and scorpions that that body administers with such robust impartiality.
I shall not detain the House by listing further my qualifications as a spokesman for the self-employed, except to remind hon. Members—I am sure they are all conscious of it—that Liberal Members represent those parts of the country with the highest proportion of self-employed persons—headed by my hon. Friend the Member for Cardigan (Mr. Howells) and followed not far behind by myself and my colleagues. So much for that quite unprovoked and unjustified attack on our status in relation to the self-employed. As to the cheap taunts about alleged timidity, simply because I am not gifted with the contentious and robust style of my distinguished predecessor, Mr. Pardoe, I shall not waste any time on those attacks.
Although I am not given to pressing points when I have had some degree of assurance from the Government, nevertheless, in this case, it is not good enough to let another year pass. The famous statement that in the long run we are all dead applies particularly to those who are approaching retirement and for whom every year of unjust restraint on their maximum pension contribution is a severe and crippling factor in their old age.

I remind the House that we are not talking in this instance about people with comfortable inflation-proof pensions. On the contrary, we are talking about self-employed people whom the Conservative Party professes to join in championing—although I sometimes wonder—who must take up pensions expressed precariously and dangerously in fixed terms of money, which for all I know may be worth only bus tickets in three or four years. It is, therefore, intolerable that these people should have to wait another year under the yoke of maxima which the Minister himself admitted are far behind the adjustment that is required to compensate for inflation since 1971.

I am bound to recommend my right hon. and hon. Friends to press this new clause to a Division, and I hope that we shall have support from all quarters of the House.

Question put, That the clause be read a Second time:—

The House divided: Ayes 15, Noes 265.

Division No. 65]
AYES
[5.41 p.m.


Bradley, Tom
Penhaligon, David
Wainwright, Richard (Colne Valley)


Carter-Jones, Lewis
Roberts, Gwilym (Cannock)
Wilson, Gordon (Dundee East)


Grimond, Rt Hon J.
Ross, Stephen (Isle of Wight)



Howells, Geraint
Skinner, Dennis
TELLERS FOR THE AYES


Janner, Hon Greville
Steel, Rt Hon David
Mr. A. J. Beith and


Kilfedder, James A.
Stewart, Rt Hon Donald (W Isles)
Mr. David Alton.


Lamble, David






NOES


Adley, Robert
Brinton, Timothy
Crouch, David


Aitken, Jonathan
Brooke, Hon Peter
Dean, Paul (North Somerset)


Alexander, Richard
Brotherton, Michael
Dickens, Geoffrey


Alison, Michael
Brown, Michael (Brigg &amp; Sc'thorpe)
Dodsworth, Geoffrey


Ancram, Michael
Browne, John (Winchester)
Dorrell, Stephen


Arnold, Tom
Bruce-Gardyne, John
Douglas-Hamilton, Lord James


Aspinwall, Jack
Bryan, Sir Paul
Dover, Denshore


Atkins, Robert (Preston North)
Buchanan-Smith, Hon Alick
Dunn, Robert (Dartford)


Atkinson, David (B'mouth, East)
Buck, Antony
Durant, Tony


Baker, Kenneth (St. Marylebone)
Budgen, Nick
Dykes, Hugh


Baker, Nicholas (North Dorset)
Bulmer, Esmond
Eden, Rt Hon Sir John


Banks, Robert
Burden, F. A.
Edwards, Rt Hon N. (Pembroke)


Beaumont-Dark, Anthony
Butcher, John
Eggar, Timothy


Bell, Ronald
Cadbury, Jocelyn
Elliott, Sir William


Bendall, Vivian
Carlisle, Kenneth (Lincoln)
Emery, Peter


Bennett, Sir Frederic (Torbay)
Carlisle, Rt Hon Mark (Runcorn)
Fairgrieve, Russell


Benyon, Thomas (Abingdon)
Channon, Paul
Faith, Mrs Sheila


Benyon, W. (Buckingham)
Chapman, Sydney
Farr, John


Berry, Hon Anthony
Churchill, W.S.
Fell, Anthony


Best, Keith
Clark, Hon Alan (Plymouth, Sutton)
Fenner, Mrs Peggy


Bevan, David Gilroy
Clark, William (Croydon South)
Finsberg, Geoffrey


Biffen, Rt Hon John
Clarke, Kenneth (Rushcliffe)
Fisher, Sir Nigel


Biggs-Davison, John
Cockeram, Eric
Fletcher, Alexander (Edinburgh N)


Blackburn, John
Colvin, Michael
Fletcher-Cooke, Charles


Bonsor, Sir Nicholas
Cope, John
Fookes, Miss Janet


Boscawen, Hon Robert
Cormack, Patrick
Forman, Nigel


Bowden, Andrew
Corrie, John
Fowler, Rt Hon Norman


Boyson, Dr Rhodes
Costain, A. P.
Fox, Marcus


Braine, Sir Bernard
Cranborne, Viscount
Fraser, Peter (South Angus)


Bright, Graham
Critchley, Julian
Fry, Peter




Gardiner, George (Reigate)
Madel, David
Shaw, Michael (Scarborough)


Gardner, Edward (South Fylde)
Major, John
Shelton, William (Streatham)


Garel-Jones, Tristan
Marland, Paul
Shepherd, Colin (Hereford)


Glyn, Dr Alan
Marlow, Antony
Shepherd, Richard (Aldridge-Br'hills)


Goodhew, Victor
Marten, Neil (Banbury)
Shersby, Michael


Goodlad, Alastair
Mates, Michael
Silvester, Fred


Gorst, John
Mather, Carol
Sims, Roger


Gow, Ian
Maude, Rt Hon Angus
Skeet, T. H. H.


Gower, Sir Raymond
Mawby, Ray
Smith, Dudley (War. and Leam'ton)


Greenway, Harry
Mawhinney, Dr Brian
Speed, Keith


Griffiths, Peter (Portsmouth N)
Maxwell-Hyslop, Robin
Speller, Tony


Grist, Ian
Mellor, David
Sproat, Iain


Grylls, Michael
Meyer, Sir Anthony
Squire, Robin


Gummer, John Selwyn
Mills, Iain (Meriden)
Stanbrook, Ivor


Hamilton, Michael (Salisbury)
Mills, Peter (West Devon)
Steen, Anthony


Hampson, Dr Keith
Moate, Roger
Stevens, Martin


Hannam, John
Montgomery, Fergus
Stewart, Ian (Hitchin)


Haselhurst, Alan
Moore, John
Stewart, John (East Renfrewshire)


Hastings, Stephen
Morgan, Geraint
Stokes, John


Hawksley, Warren
Morris, Michael (Northampton, Sth)
Stradling Thomas, J.


Heath, Rt Hon Edward
Morrison, Hon Charles (Devizes)
Tapsell, Peter


Heddle, John
Morrison, Hon Peter (City of Chester)
Tebbit, Norman


Henderson, Barry
Mudd, David
Temple-Morris, Peter


Hicks, Robert
Murphy, Christopher
Thatcher, Rt Hon Mrs Margaret


Higgins, Terence L.
Myles, David
Thomas, Rt Hon Peter (Hendon S)


Hill, James
Neale, Gerrard
Thompson, Donald


Hogg, Hon Douglas (Grantham)
Nelson, Anthony
Thorne, Neil (Ilford South)


Holland, Philip (Carlton)
Neubert, Michael
Thornton, George


Hooson, Tom
Nott, Rt Hon John
Townend, John (Bridlington)


Hordern Peter
Onslow, Cranley
Townsend, Cyril D. (Bexleyheath)


Howell, Rt Hon David (Guildford)
Oppenheim, Rt Hon Mrs Sally
Trippier, David


Howell, Ralph (North Norfolk)
Osborn, John
Trotter, Neville


Hunt, David (Wirral)
Page, John (Harrow, West)
van Straubenzee, W. R.


Hunt, John (Ravensbourne)
Page, Rt Hon R. Graham (Crosby)
Viggers, Peter


Irving, Charles (Cheltenham)
Parkinson, Cecil
Waddington, David


Jessel, Toby
Parris, Matthew
Wakeham, John


Jopling, Rt Hon Michael
Patten, Christopher (Bath)
Waldegrave, Hon William


Kaberry, Sir Donald
Pawsey, James
Walker, Rt Hon Peter (Worcester)


Kershaw, Anthony
Pink, R. Bonner
Walker-Smith, Rt Hon Sir Derek


King, Rt Hon Tom
Pollock, Alexander
Wall, Patrick


Knight, Mrs Jill
Porter, George
Waller, Gary


Knox, David
Price, David (Eastleigh)
Walters, Dennis


Lang, Ian
Prior, Rt Hon James
Ward, John


Langford-Holt, Sir John
Proctor, K. Harvey
Warren, Kenneth


Latham, Michael
Raison, Timothy
Watson, John


Lawrence, Ivan
Rathbone, Tim
Wells, John (Maidstone)


Lawson, Nigel
Rees, Peter (Dover and Deal)
Wells, P. Bowen (Hert'rd&amp; Stev'nage)


Le Marchant, Spencer
Rees-Davies, W. R.
Wheeler, John


Lennox-Boyd, Hon Mark
Renton, Tim
Whitelaw, Rt Hon William


Lester, Jim (Beeston)
Rhodes James, Robert
Whitney, Raymond


Lewis, Kenneth (Rutland)
Ridsdale, Julian
Wickenden, Keith


Lloyd, Ian (Havant &amp; Waterloo)
Rifkind, Malcolm
Wiggin, Jerry


Lloyd, Peter (Fareham)
Roberts, Michael (Cardiff NW)
Wilkinson, John


Loveridge, John
Roberts, Wyn (Conway)
Williams, Delwyn (Montgomery)


Luce, Richard
Rossi, Hugh
Young, Sir George (Acton)


Lyell, Nicholas
Rost, Peter
Younger, Rt Hon George


Macfarlane, Neil
Royle, Sir Anthony



Mackay, John (Argyll)
Sainsbury, Hon Timothy
TELLERS FOR THE NOES:


McKelvey, William
St. John Stevas, Rt Hon Norman
Mr. John MacGregor and


McQuarrie, Albert
Scott, Nicholas
Mr. Tony Newton.

Question accordingly negatived.

New Clause 11

STAMP DUTY: EXEMPTION FOR FIRST TIME HOME BUYERS

"First-time home buyers shall be exempt from stamp duty on the first £25,000 of the purchase price."—[Mr. Shersby.]

Brought up, and read the First time.

Mr. Michael Shersby: I beg to move, That the clause be read a Second time.
The purpose of the clause is to exempt first-time home buyers from stamp duty on the first £25,000 of the purchase price

of their home, be it a house or flat, freehold or leasehold. If it were accepted it would relieve first-time home buyers of the payment of £250 that exists under the outmoded, antiquated, unacceptable and much-hated duty, and which does much to discourage people from buying their own homes.
I therefore ask my hon. and learned Friend the Minister of State for that concession on behalf of young couples in my constituency of Uxbridge and, indeed, first-time home buyers throughout the country. At present they are faced with the difficult problem of having to find several thousands of pounds before they can even begin to pay off their


mortgages. They have considerable expenses in terms of legal fees, removal costs and furnishing, in addition to stamp duty.
I appreciate that this is not a matter that interests those on the Labour Front Bench—that is presumably why they are paying no attention—but it interests many people in this country who wish to buy their own homes. I therefore hope that the House will take seriously the proposed new clause.
The cost of buying a new home is substantial. Over the past few years we have seen an unprecedented rise in the cost of homes. As I look today at my local newspaper I see a great many three-bedroom semi-detached houses in the price range £25,000 to £30,000, so I have not pulled the figure of £25,000 out of the air. It closely relates to the minimum cost of buying a three-bedroom semi-detached house or a flat in the London borough of Hillingdon and West London generally. I realise that property prices may be lower elsewhere, such as in the constituency of my hon. Friend the Member for Upminster (Mr. Loveridge), on the eastern periphery of Greater London. My intention in moving the new clause is to enable people who wish to buy homes in Hillingdon and other areas, particularly in large cities, to obtain a meaningful exemption.
To illustrate the extent of the relief that could be given, I can do no better than quote the figures that would apply to first-time home buyers in my constituency. If the clause were in operation, they would pay no duty on a house costing up to £25,000. If they bought a house costing over £25,000, they would have to pay stamp duty of £450 under the substantially increased scale of charges introduced by the former Chancellor of the Exchequer in 1974. The increased rates that were fixed by the Labour Government are set out in Hansard in answer to a parliamentary question that I put in April 1974. The then Paymaster General said:
Increased duty will generally be payable only in the minority of cases where the cost of the house exceeds £25,000."—[Official Report, 11 April 1974; Vol. 872, c. 256.]
If we consider that answer just over five years later when home prices have escalated considerably, we must recognise that there is an urgent need to amend the scale of stamp duty charges

and an overpowering need to abolish the duty altogether. I recognise that politics is the art of the possible, and I am not today proposing the total abolition of the duty. In his Budget, my right hon. and learned Friend has given tax relief across the board, and I know that he cannot satisfy every proposal to abolish every tax that people dislike. Having said that, however, I hope that as part of his review of taxation generally he will pay urgent attention to the need to amend the scale of stamp duty, recognising that in many parts of Britain a modest house can cost between £25,000 and £40,000.
I am sure that my hon. and learned Friend the Minister of State is aware of that need. That is why I believe that the consideration of the total abolition of the duty is for the Government and not for me to raise this afternoon. My proposal is essentially a modest one. It would not be unduly expensive in terms of loss to the Revenue. The calculated loss is about £20 million. My new clause would help home owners by relieving them from a small but significant part of the expense involved in purchasing their first house. It would not affect the rate of stamp duty on more expensive houses, and it is what is needed now in order to encourage home owners, not only in the east-west axis from Uxbridge to Up-minster, but throughout the country.
6 p.m.
I accept that the Minister of State will be sympathetic to my case because he is a very sympathetic man. No doubt he will have an excellent Treasury brief setting out all the reasons why he should not accept my new clause. I advise him to put his brief back on the shelf, take his courage in both hands and accept this modest proposal. If that is impossible, I hope that at least he and his right hon. and hon. Friends will give an undertaking to consider this matter further and bring forward at a very early date proposals to give relief to first-time home buyers.

Mr. Robin F. Cook: The House will be grateful for the opportunity to discuss the effect of fiscal policy on house purchases. The hon. Member for Uxbridge (Mr. Shersby) made a reasonable and moderate speech in support of what he described as a modest


new clause. He referred to the wider costs of house purchase, beyond that of stamp duty, and he must agree that it is fair and proper for the House, in evaluating the appropriateness of his amendment, to refer to the other forms of fiscal support for house buyers.
The cost of that support through the tax system is very substantial. Last week, in answer to a parliamentary question, the Minister of State said that the cost in a full year of mortgage interest relief at 1979–80 income levels was estimated at about £1,400 million. That is a lot of money. It is a significant slice of the tax yield. If we look at the Red Book, we find that £1,400 million is the equivalent of 7 per cent. of the expected revenue from income tax in the current year. To put it another way, £1,400 million would finance a 3p cut in the basic rate of income tax.
Inevitably, such a sum of money must affect the other ways in which income tax operates. Clearly, the net effect of this relief is to shift the burden of taxation from one group of people to another. In this case, it shifts the burden from those who are purchasing homes to those who are not—either because they have completed their purchase or because they are renting homes and cannot claim tax relief on their rents. Moreover, the real inequity, which must be of some concern even to the electors of Uxbridge, is that that tax relief is available to those on the higher rates of taxation. To a person who pays tax at 60 per cent. the value of tax relief on mortgage payments is literally double that to a person who is on the basic rate.
Contrary to popular belief, it is not a particularly small group of people who benefit in this way. I pray in aid the Green Paper entitled "Housing Policy" which was produced two years ago. It contains the following statement:
As for the tax relief at the higher rates on mortgage interest, this benefit is no longer confined to a tiny minority—even some first-time house-buyers benefit.
The very fact that this form of tax relief is available encourages those who are paying tax at the higher rate to maximise the amount which they spend on the purchase of their homes. In that way, they can diminish the amount which they have to pay in tax. Having heard a considerable number of speeches in this House over the

past few weeks about the importance of this Budget in widening choice, I must point out that this form of tax relief is perverse because it diminishes choice. It discourages choice between different housing tenures because it restricts tax advantage to one particular group—namely, those who buy their own homes.
If we were to put to the electorate an abstract proposition that tax relief should be more valuable to those on the higher rate of taxation, I would be surprised if we got any mandate, even from the electors of Uxbridge. Also, we must consider this in the context of a Budget which has made dramatic inroads in the higher rates of taxation. It is worth recalling the rationale of having tax relief on mortgage repayments. This was because we once had a steeply progressive rate of income tax. I quote the evidence given by a Treasury witness two years ago to the Expenditure Committee. He said that mortgage interest relief
is also in some degree a reflection of capacity to pay in a progressive tax structure ".
In this Budget, we witness the dismantling of that progressive structure. We have seen substantial tax benefits given to the wealthy. We are told by the Treasury Bench that these tax cuts do not go as far or as fast as the Government had originally hoped. Therefore, many of us conclude that there will be further reductions in taxation later. This will attack even further the progressive structure of income tax in this country. Therefore, is it justifiable specifically to preserve the mortgage interest relief at the higher rates of taxation? Tory Members cannot have it both ways—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The hon. Member must address himself to the question of stamp duty.

Mr. Cook: I am suitably rebuked by the Chair. It is impossible to consider the value of the hon. Member's proposition that we should provide this exemption for home buyers unless we take account of the other ways in which home buyers benefit from our fiscal system. That is what I was trying to show.
Conservative Members cannot have it both ways. Either we have a steeply progressive rate of taxation which demands compensation for those who wish to buy their own homes, and provides it either by


the abolition of stamp duty or by specific provision for mortgage interest relief, or we have a less progressive rate of taxation, as in this Budget, in which case we can no longer justify specific exemptions. If the Government intend to come to the House in future and propose further cuts in the rate of taxation, I would urge them to look at this particular item of stamp duty as a way of recouping the money, rather than piling the agony of indirect taxation even more on the average wage earner who rents his home.

Mr. John Loveridge: It gives me great pleasure to support the new clause tabled by my hon. Friend the Member for Uxbridge (Mr. Shersby). The clause asks that first-time home buyers should be exempt from stamp duty on the first £25,000 of the purchase price.
Under the 1972 Finance Act the threshold of £5,00 was raised to £10,000 and it is now at £15,000. I understand that to provide the relief for which we are asking would cost the Exchequer a gross amount of perhaps £20 million, although if administrative costs were subtracted from that the figure would be much less.
This proposition must be near to the heart of the Minister. During the election many Conservative Members stressed the need for help for first-time buyers. There are limits to what the Government can do after years of a Labour Government, but the Minister could give some help to those who hoped for more. Sitting tenants have the advantage of fair though generous discounts, but that is not so for the first-time buyer. They are often young newly-married couples who do not have the advantage of council tenancies and who are affected by rising market prices for houses and high interest rates.
Land prices have risen sharply. They were running at about £43,000 per hectare in the first part of 1977. That figure had risen to £60,000 per hectare by the second half of 1978. It will be some time before the cuts in development tax have any effect on house prices. The young couple ask themselves how much cash they can find when they want to buy for the first time. Apart from the immediate down payment for a mortgage, they face legal charges, surveyors' fees, removal costs, furnishing costs, insurance fees and,

where the purchase price is above £15,000, stamp duty. That may be the last straw that breaks the camel's back.
Stamp duty yields to the Government far more than if it had risen merely with inflation. In 1974–75 the yield was £35 million. The estimated yield for 1978–79, as were told on 5 March, is £120 million. At the same time, the retail price index has risen at about only half that rate. The Government could well give away part of the £120 million raised by this tax for the relief that we ask.
An increasing number of houses are falling into the stamp duty net. In October 1974 the houses sold in Greater London that were liable to stamp duty represented 20·8 per cent. of the total sold in the area. By November 1977 that figure had risen to 36·4 per cent., as the right hon. Member for Llanelli (Mr. Davies) pointed out. No doubt, the proportion has risen much more since that time. The fast rise in house prices is greatly affecting the first-time buyer. Nowhere is that more true than in the Greater London area.
In Upminster one-bedroomed flats fetch between £15,000 and £18,000 and two-bedroomed flats fetch between £20,000 and £25,000. There are few two-bedroomed houses and they are hard to find. A three-bedroomed semi-detached house now fetches £35,000 and a detached property £40,000 depending on its site and condition. Those figures are not much lower than those in Uxbridge, where the first-time buyer is even worse off. However, young couples in Upminster are hard put to it.
Council properties in Upminster also have high valuations. A two-bedroomed house is worth from £14,000 to £22,000, a three-bedroomed house from £15,000 to £26,000, and a four-bedroomed house from £16,000 to £33,000. Where can most young newly married couples raise that sort of money? Far fewer new houses are being bought by first-time buyers. The figure has decreased from 62 per cent. in 1970 to a little over 43 per cent. in 1978.
6.15 p.m.
A substantial regional difference in prices affects young couples. In 1978, under-25-year-olds in London bought 21 per cent. of all the houses that were bought by first-time buyers. In the Northern region the proportion of young


couples was more than twice that figure. There, 45 per cent. of first-time buyers were in that age group. Of course, the figures depend on the total number of houses purchased but, none the less, the percentage figures are a clear indication of a difference between the areas. I cannot believe that it is due to the northerners' desire to settle down sooner into matrimony. The young couple in Greater London cannot afford to buy because the prices are so much higher.
Because stamp duty is charged on a sliding scale, young couples in Greater London are hurt by it most of all. Stamp duty is over £75 on a house which costs £15,050 but where in London can such a house be found? At the price of £20,000 the duty is over £200; the next £10,000 is charged at £15 per thousand pounds and over the price of £30,000 it is charged at £20 per thousand pounds.
Conservatives want to see more home ownership. The young, in particular, are hit by rising prices and, therefore, by stamp duty. We ask for the threshold to be raised by £10,000 only. That seems a reasonable request. The population in the 20 to 25 age group will temporarily grow during the next decade from 3¾ million in 1976 to an estimated 4½ million by 1986. A small relief would not only give great encouragement to first-time buyers now but would encourage the growing number of teenagers who will soon enter marriageable age to look ahead with hope. I hope that the Government will cut back stamp duty now.
In an article in the Estates Gazette on 16th June 1979 about the Budget and property, Mr. W. P. Hogan wrote:
One must feel some sympathy for the potential first-time house buyer, generally benefiting less than others.
The map of Greater London looks like the outspread wings of a butterfly. Uxbridge and Upminster are the tips of the wings. I hope that the Minister will treat the tips of the butterfly's wings with a gentle hand and give us the relief for the young for which we ask.

Mr. Richard Wainwright: Liberal Members warmly support the new clause and the arguments advanced by the hon. Member for Uxbridge (Mr. Shersby). If we have any criticism, it is simply that the new clause is so modest and restricted in its application. But I see the force of

that, and I am sure that with such a modest new clause, if the hon. Member does not get full satisfaction, he will want to obtain an expression of the will of the House as to the new clause.
I have two reasons for intervening in the debate. I shall not attempt to repeat the arguments so eloquently put by the hon. Member. First, as to the special claims of first-time house buyers, whatever hon. Members may think of the recent action of the building societies in defying market forces and acting as King Canute—perhaps in deference to some strange pressure from odd quarters—there is no doubt that what the building societies have done is gravely handicapping to first-time house buyers. It may he all very well for those who are already in possession of a house and who already have a mortgage, but the funds available for first-time buyers will be woefully and artificially limited by the decision taken last week by the building societies. Therefore, anything that can make un to these people some of the injury they are suffering is to be welcomed.
However, much more important than that, the new clause is at least a further attack on the whole iniquitous and outdated concept of the absurd stamp duties. It ill behoves Conservative Members, and it would be monstrously out of character with all the philosophy and promises of the Conservative Party—that the Conservatives are the apostles of market forces and they want free exchange to flourish in an almost Elizabethan fashion—to support these absurd and antiquated clogs on the market. They are the hallmark of petty German princelings before Bismark who sat on the gates to their electorates, their margravates, and so on, saying "Before these goods pass into my little princedom, you shall pay a stamp duty, an excise or some toll"—for which there was no justification except the unlimited greed of Governments to collect money by any squalid devices that they could use.
Anyone who has had the humiliating experience of visiting a stamp office will know that they are one of the most absurd survivals in modern times. In a sort of jungle ritual, one presents one's estimate of the amount that is changing hands. That is solemnly scrutinised, and it is sometimes questioned, but in the end there is an adjudication. Then comes the


primitive moment when one's document is placed under a piece of unrivalled Victorian ironwork and the hand of a civil servant crashes the thing down and one has one's tally. This is done in a manner which would, perhaps, have done credit to the fifteenth-century Exchequer.
All this ought to go. If the proclaimed philosophy of the Conservative Party means anything at all, it will go during the next year or two. I suggest that there is nothing better that the Government could do than to make a start now.

Mr. John Wilkinson: I intervene in the debate merely in order to give my wholehearted support to my hon. Friends the Members for Uxbridge (Mr. Shersby) and Upminster (Mr. Loveridge). My hon. Friend the Member for Uxbridge has done the House a great service in moving the new clause.
It is no accident that the outer London boroughs achieved the best swing to the Conservatives at the general election, because they had as candidates people such as my hon. Friends, who clearly showed that they have the interests of their electors at heart. The question of maximising the opportunities for home ownership was at the heart of our programme. The idea of raising the threshold for stamp duty to £25,000 should commend itself not merely to people in the London area but, as has been shown by the intervention of the hon. Member for Colne Valley (Mr. Wainwright), much more widely.
In the London area we face particular problems. The cost of commuting is continually rising. The benefit of luncheon vouchers, when one has reached one's work after a long, hot and tiring journey, is not what it was—as we shall see from the debate which is to follow on a subsequent new clause.
All the time, house prices have been escalating hugely in the London area, and interest rates are at an astronomically high figure. This means that the newly married couple face a very difficult problem. They do not wish to have to go into rented accommodation. It is not as though rented accommodation was easy to come by, particularly in the private sector, after over five years of Socialist Government.
We have been doing everything we can to make it easier for young people, par-

ticularly in Hillingdon, to own their homes for the first time. For example, equity sharing schemes for first-time home buyers are especially attractive. But the would-be home buyer still has to pay stamp duty on that part of the council property which he is seeking to buy.
The intervention of the hon. Member for Edinburgh, Central (Mr. Cook) was especially revealing. It showed the vindictive attitude of the Labour Party to home ownership.
In looking at the new clause, which is a modest proposal, we should bear in mind that over 40 per cent. of mortgages are granted to first-time home buyers. There certainly is the demand, but it is very difficult to meet the demand for home ownership on the part of the would-be home buyers coming into the market for the first time.
This modest proposal should be thoroughly welcomed and supported. I am most grateful to my hon. Friend the Member for Uxbridge for moving the clause.

Mr. Dalyell: The attitude of my hon. Friend the Member for Edinburgh, Central (Mr. Cook), which I am bound to say I share, is not vindictive. The whole point is that a great deal of money is involved in this proposal. I do not hide for a moment the fact that it is not only in Uxbridge or Upminster that this is an attractive proposition. No doubt in South Queensferry or any of the areas that my hon. Friend knows there are young couples in a similar financial position who would very much like to take advantage of these proposals. However, the question is, how much do they cost?
It would help the House if at this stage the Minister of State interrupted me to let me know the Treasury estimate of the cost to the Exchequer of these proposals. The hon. Member for Uxbridge (Mr. Shersby) mentioned the sum of £20 million. Is that the sum about which we are talking, or is it more or less? I have a suspicion that it could be a great deal more than £20 million. Has any estimate been made of the cost to the Exchequer?

Mr. Peter Rees: indicated assent.

Mr. Dalyell: I was giving the Minister a chance to intervene. However, if he wishes to provide the estimate during his


speech, so be it—although it might have been helpful to have it by now.
What we must bear in mind is that the necessary money could be used for all sorts of other deserving governmental requirements. One really has to ask whether first-time home buyers should be the ultimate priority. That is my first question.
I come to my second question. Here I agree with the hon. Member for Colne Valley (Mr. Wainwright). A great many people wonder whether stamp duty is a sensible form of raising revenue at all, in this day and age. I shall not use the word "Elizabethan" about it. I think that I understand pretty well how it all came about. None the less, in any sensible review of housing finance, should it not at least be considered whether stamp duty is a sensible way of raising money, and whether it might not be better, and certainly a great deal cheaper, to raise it through other forms of taxation? Therefore, I ask the Minister to justify whether stamp duty as such is a sensible way of raising revenue.
Clearly, nothing can be done about the matter this year, but I think that some of us would like to lay down a marker that when discussing next year's Finance Bill we shall be asking the same question.

6.30 p.m.

Mr. Paul Hawkins: I declare an interest as a chartered surveyor who has an interest in a firm that sells houses. I may disagree with the hon. Member for Edinburgh, Central (Mr. Cook) but he is not vindictive. The hon. Gentleman made a good point, although I believe, like the hon. Member for Colne Valley (Mr. Wainwright), that it is time we got rid of stamp duty. It is an anachronism. It is out of date. I thought that the hon. Member for Colne Valley would go on to talk about wax, candles and sand rather than the Victorian stamping machine that he described.
The hon. Member for Edinburgh, Central said that the majority of wage-earners are council house tenants or that they occupy tenanted accommodation. It is Conservative Party policy to end that situation and give tenants the opportunity to buy their own homes. Before long, certainly around London, it will be found

that council houses are getting up to a figure of £25,000—

Mr. Wilkinson: They already are.

Mr. Hawkins: —or over, although it has not yet happened in my area. Stamp duty represents a deterrent to those seeking to buy council houses—a major step for a family that has always gone from council house to council house. To put another £200 on top of the cost is a major disincentive to their buying the property.
In my constituency, there is practically no rented accommodation. The accommodation that did exist is now taken over by American Service men from bases in the area. A young couple who want to marry and move into a home of their own, after living in a couple of rooms in the home of one set of parents or the other, have to go out and buy. In another one or two years, in my opinion, the £25,000 mark, even in my area, will be surpassed as the price of a modest home that a young couple may want to buy. Even if the Minister of State cannot say anything of great joy today, I hope he will be able to hint that in the next Budget this disincentive to purchasers will be removed.

Mr. Vivian Bendall: I declare an interest as an estate agent and surveyor and principal in a firm that disposes of houses. I would like to support the new clause put forward by my hon. Friend the Member for Uxbridge (Mr. Shersby), supported ably by my hon. Friend the Member for Upminster (Mr. Loveridge). This is a serious and important issue for a number of reasons. I spoke in the main Budget debate about the problem. I am well aware of it. When young people are negotiating the purchase of a property, my staff have been instructed to make them aware of the amount that they will have to pay in stamp duty. We found that negotiations had reached almost the stage of contracts being exchanged before young people realised the amount they would have to pay. On numerous occasions they had to withdraw from the sale.
This problem particularly applies to young first-time buyers. They have saved the deposit but are operating on a tight budget. The price of removals and furnishings can be costly when setting


up a home for the first time. These buyers constitute the area of greatest concern. But it is not the only area where stamp duty causes a problem. Many people who would have sold their houses and moved somewhere better now think twice about moving house. This has slowed down the availability of property coming on to the market in the past few months or the past year and has produced an explosion in prices in the residential property market. The question of stamp duty must be studied across the board.

Mr. Dalyell: The hon. Gentleman, who has professional experience, says that stamp duty makes what is obviously more than a marginal difference and that it constitutes a considerable amount in decision-making. Are the Government, if he is right, not being let in for a good deal of expenditure? Are we not talking about considerable sums?

Mr. Bendall: I am suggesting that stamp duty slows down to some degree the availability of property. I hope that my experience outside the House enables the hon. Gentleman to understand what I am driving at. Hon. Members are not suggesting that stamp duty should be abolished immediately. They are saying, as I said in the main Budget debate, that the matter has not been examined since 1974 but that the inflationary spiral in property has continued and more money is being collected. This sector has been unfairly singled out. It should have been treated in a more just and fair way.
I support what my hon. Friends have said. I am concerned for the young and the first-time buyers. I see them in my own constituency in part of the London conurbation where a modest semidetached house costs £30,000 to £35,000 and sometimes £40,000. I support remarks related to the cost of council property that is being sold. The market value of some council property in the London area is already approaching £30,000. With a 50 per cent. discount, this brings the cost to £15,000—the exact figure at which stamp duty starts. I make a plea for the Minister of State to examine this matter. If he feels that nothing can be done on this occasion, I ask that it is examined in the future and some relief given, certainly to first-time buyers.

Mr. Dalyell: Some hon. Members find it difficult to define a first-time buyer. One partner, who is divorced, may marry someone who has not been divorced. What is the definition of a first-time buyer? Some of us suspect, from our constituency experience, that resentment arises over the definition.

Mr. Bendall: First-time buyers are invariably people who would go for a mortgage. Anyone who can afford to buy a property without a mortgage could probably well afford to pay the stamp duty. I think that it would therefore be fairly easy to run a scheme related to first-time buyers by reference to it being the first application to a building society.

Mr. Robert Adley: I do not know whether my hon. Friends the Members, for Uxbridge (Mr. Shersby) and for Upminster (Mr. Loveridge) intend to push this matter to a Division. I must tell them that if they do I shall not be with them, simply because I think that it would be extremely unfair on the Government, after being in office for such a short time, to have to face a Back Bench revolt on this issue.
Various of my hon. Friends have made important points which I support, although I hope that they will not press the matter to a Division. I hope, however, that my hon. and learned Friend the Minister of State will recognise that many of us in various parts of the country feel that the principle behind the new clause is of importance.
I noted what was said by the hon. Member for Colne Valley (Mr. Wainwright), but I see that he is not now present in the Chamber. The speed with which he goes after making a speech would leave even Sebastian Coe breathless. I felt that he was a little unfair in his snide comment about pushing the question to a Division, and I can only say that many of us feel that there is some justification for the clause. I wish to make two brief points on it.
Many people come to my constituency to acquire second homes—what local people tend to call "weekend grockles". Weekend grockles are usually well breeched people who come down and buy small houses which are particularly appealing to local people, especially young people, born and brought up in such a constituency as mine and who find


it difficult to compete in the weekend grockle market. I hope, therefore, that my hon. and learned Friend will note that it is not just the surburbs of London which suffer from this problem.
Moreover, because young people in such areas as mine find it difficult to buy their first homes, there develops a growing imbalance in the age of population, and this has a serious adverse effect on the whole socio-economic structure of the area.
Finally, although I recognise that this is not my hon. and learned Friend's responsibility, I ask him to bear something else in mind when he is looking at this matter, perhaps in the context of next year's Finance Bill. I have in mind here the problems of young people in such constituencies as mine wanting to buy their first home. Perhaps my hon. and learned Friend will have a word with the Department of the Environment about another iniquitous piece of legislation, the Housing (Homeless Persons) Act, which also has helped to push local people out of the housing market. If he can get rid of that piece of legislation as well, we shall be extremely grateful.

Mr. Peter Rees: I know that the whole House will join me in congratulating my hon. Friends the Members for Uxbridge (Mr. Shersby) and Upminster (Mr. Love-ridge) on initiating an extremely interesting, worthwhile and important debate. If I may pick up one of the metaphors used, I think, by my hon. Friend the Member for Upminster, I am sure that we were carried away on the wings of my hon. Friends' eloquence—though whether on the wings of a dove, a butterfly or a hawk I know not.
I cannot say the same for the eloquence of the hon. Member for Colne Valley (Mr. Wainwright). I rather lost him when we got into the realm of German princes—

Mr. Graham Page: We have lost him now.

Mr. Rees: I think that my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) made the point rather more effectively. Obviously, the hon. Gentleman, having inherited the mantle of Mr. John Pardoe, feels that he must assume his eloquence, too. As I say, he lost me, and I think that he lost

other hon. Members as his speech proceeded.
I think that what characterised the debate was the wealth of constituency and professional experience upon which hon. Members were able to draw. Indeed, I join the hon. Member for West Lothian (Mr. Dalyell) and acknowledge at once that this problem is not confined to the Greater London area. It is felt in West Lothian, and we feel it down in Dover and Deal. It is a problem which touches many hon. Members and many of their constituents.
I can assure my hon. Friend the Member for Ilford, North (Mr. Bendall) that although the last time the limit was altered was in 1974—when it was done by the previous Government, although of course, under pressure from the then Conservative Opposition—the question has been debated over the intervening years. I recall that I myself initiated a debate in May 1978, perhaps not precisely on this point but at least on the general question of stamp duty and houses. Therefore, one of the two themes which ran through the debate is very much in my consciousness and, I am sure, that of my right hon. Friend the Chief Secretary and other Treasury Ministers who have to consider the problem.
6.45 p.m.
There are two themes—first, the increase in house prices which has affected the whole country, and, secondly, the particular problem of first-time home buyers. We are sensitive to the problem of first-time home buyers, but I do not wish—indeed, I should probably be out of order to do so—to be drawn too deeply into general questions of housing. Although hon. Members may well say that it is difficult to disentangle the present question from housing problems, I am sensitive to the stern eye of the Chair and I hope that I shall be forgiven if I go no further in that direction.
I am always diffident about advancing technical objections. I have in the past been conscious of the powerful arguments which the right hon. Member for Llanelli (Mr. Davies) used to advance whenever I had a new clause or amendment down for debate, when I was invariably told that it was technically defective unless perhaps one figure was altered. So I have never liked that argument, but I must make


the point in the present context, and here I take up something said by the hon. Member for West Lothian.
There would be certain practical difficulties in identifying first-time home buyers. I hope that my hon. Friend the Member for Ilford, North will not mind my saying that I was not entirely persuaded by him on this matter. There would be all sorts of delicate questions: for example, if the husband had bought the home in the first place and next time the wife was the nominal purchaser, or, indeed, on a third occasion—perhaps only a limited class of case but possible none the less—if the trustee of a settlement were the buyer.
How would one apply the rules in such circumstances? There would be technical difficulties. However, I appreciate that my hon. Friends are concerned to debate the principle now and they would not wish me to enmesh the House too closely in those rather fine and—dare I say?—lawyer's points.
On the more general question, the theme running through the speeches of one or two of my hon. Friends was that this is an antiquated and much-hated tax. It is certainly an old tax. I do not know that I go all the way with the proposition attributed, I think, to Adam Smith—I am not sure whether it was he or someone else—that an old tax is a good tax, but it is certainly true that by the time a country has lived for a couple of centuries with a tax one knows its imperfections, and some of them may well have been smoothed away by the intervention of the House.

Mr. Dalyell: The cost of collection per £1,000 of yield is a fair criterion, and one's suspicion is that it is extremely high.

Mr. Rees: That is a shrewd thrust. I had already anticipated the point, since I, too, have been concerned during the past weeks to consider that aspect of the stamp duty. It is an antiquated tax. I do not believe that it is any the worse for that, and I cannot believe that the House was over-impressed by the affront to the delicate susceptibilities of the hon. Member for Colne Valley. I do not know how many of us have shared his experiences in stamp offices. I suspect that he is more sensitive than the ordinary,

and we need not worry too much about that.
Looking at the matter with the eye—I hope not the jaundiced eye—of a recently appointed Treasury Minister, I have to tell the House that stamp duty raises £550 million, and the yield from the stamp duty on the purchase of residential property is £120 million. I think that the hon. Member for West Lothian was keen to know that figure. Those are not inconsiderable sums, and the cost of collection is about 1 per cent. of the yield. I am glad to see a nod of assent by the right hon. Member for Llanelli.

Mr. Denzil Davies: Same old brief.

Mr. Rees: No, not the same old brief. The matter is looked at with a fresh eve, without the same prejudices.

Mr. Denzil Davies: A good brief.

Mr. Rees: A good brief—so be it. The House will see that the cost of collection is relatively low. In fact, cost-effectively it is possibly in this field the best tax, apart from the petroleum revenue tax, which exhibits quite different characteristics. These are, as I say, considerable sums of money.
Several hon. Members asked how much the new clause would cost. I have to say with all candour that I do not think that one can give that figure. The stamp offices are not prone to keep records such as will identify the persons presenting documents. They have no records as to whether they would be first-time transactions or not.
All I can say to my hon. Friends is that if the lower limit were adjusted upwards to £25,000 and all the subsequent bands were adjusted—one could do it on various bases—then, leaving aside any built-in preferences or reliefs for first-time home buyers, the cost would be between £85 million and £95 million. In the straitened circumstances of today those, too, are fairly considerable sums of money.

Mr. Shersby: Is my hon. and learned Friend aware that the housing and construction statistics for 1978 show that about 47 per cent. of all new mortgages were granted to previous non-owner-occupiers? That is an interesting statistic. With a little more probing it might be possible to get a more exact figure.


Certainly my information is that the cost would be less than the Minister believes it to be.

Mr. Rees: All that I am saying is that we do not have precise figures. There are ways in which we could approach the problem, but there are no figures that I could put to the House with utter confidence.
I raised earlier the practical difficulties of limiting that sort of relief to first-time home buyers, however one defines that category. I suspect that if one advances down that course one will be led to altering the existing limit and the subsequent bands. I emphasise that that would be an expensive exercise, and certainly not one which I would be disposed to recommend to the House in this year, when there have been considerable financial constraints on the Government. I may not carry Labour Members with me, but I am sure that my hon. Friends will recognise the constraints under which the Government are operating and the extreme difficulties that we have had to face in order to make substantial decreases in the levels of taxation.
The hon. Member for Edinburgh, Central (Mr. Cook) made a more general speech. To follow the hon. Gentleman exactly in all the points that he made would lead me to fall foul of the Chair, as I am sure the hon. Gentleman will recognise. However, I take up his more general point. Of course, there is a question for debate on how far we should go for a considerably lower level of taxation and to sweep away or diminish the various special reliefs—not only in the area of income tax but in other areas. That is a legitimate matter for debate and one which the House will no doubt wish to consider, even if not this year.
I would not join my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) in accusing the hon. Gentleman of being vindictive. The matter is a legitimate area for debate, but I hope that I shall be forgiven by the House for not following the hon. Gentleman down that route today. If I did that I might be out of order, as technically we are debating the level of stamp duty. However, I recognise the point that he makes, and it may be that we shall wish to consider it on another occasion.
The hon. Gentleman made another point, and I hope that it is fair to take it up. I do not think that we can be said to have dismantled totally the higher rates of income tax. All that we have done is to bring down the highest rate for earned income from 83 per cent. to 60 per cent., and for investment income from 98 per cent. to 75 per cent. Nor do I think it right that we should attempt to distinguish higher rate tax and basic, or lower than basic, rates of tax in considering existing reliefs. The essence of having amalgamated surtax and income tax was that this sort of refined distinction should no longer obtain in our tax system.

Mr. Cook: The Minister will correct me if I am wrong, but am I not right in suggesting that tax relief on life assurance premiums is available only at the standard rate of taxation?

Mr. Rees: Relief on life assurance premiums is now given on a different basis—one pays a net sum. There is a further point that the hon. Gentleman could put to me. I agree that the relief for covenants in favour of charities is only at the basic rate. Without laying down policy, I regard these points, especially that relating to charities, as not particularly defensible anomalies. But there it is. We shall wish to look at the Goodman report and all its ramifications in due course.
The hon. Gentleman is quite right. There are one or two anomalies left over from the days when surtax and income tax were regarded as slightly different taxes. I do not feel that nowadays one would wish to build into the system a distinction and to give reliefs at varying rates. Perhaps I am slightly out of order to debate that point, but I recognise the point that the hon. Gentleman is making. I do not find it a sympathetic one.
I return to the main themes that ran through the contributions, mostly from my hon. Friends and founded on deep constituency and professional experience. They were appreciated by the Government Front Bench. I hope that my hon. Friends will recognise the technical difficulties and the cost factor that has been very difficult for the Government to sustain in this year. I am, however, conscious of remarks that I made when the Conservative Party was in Opposition


recently, and we shall wish to return to the point another year.
I hope that my hon. Friends will feel that the debate has been a worthwhile exercise. We extend congratulations to my hon. Friends the Members for Uxbridge and Upminster on giving us the opportunity to debate the issue. I hope that my hon. Friends will not feel it necessary to press the new clause to a Division. Indeed, I hope that they will withdraw it, feeling that substantial justice has been done to the issue on this occasion and recognising that we shall, I hope, return to the matter in a subsequent year.

Mr. Shersby: I am grateful to my hon. and learned Friend the Minister for his comprehensive and sympathetic reply to an interesting dabate. He clearly recognises the difficulties that face first-time home buyers, but he draws attention, quite rightly, to the difficulties that I had expected him to pinpoint—namely those of identifying first-time home buyers. I do not think that the problems are insuperable, but they do present some difficulty.
I was heartened to hear my hon. and learned Friend's words "not this year, but we shall look again next year". I accept that in the Budget proposals both the Minister and his fellow Treasury Ministers have made substantial contributions towards the ability of people to own their own homes. On the basis that the Government are willing to consider the matter in looking at the future of taxation and stamp duty, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 12

CAPITAL ALLOWANCE FOR RETAIL PREMISES

'(1) Chapter 1 of Part 1 of the Capital Allowances Act 1968 shall apply in relation to qualifying retail premises as if they were an industrial building or structure.

(2) "Qualifying retail premises" means any shop which is in a building or buildings of a permanent nature and is being used for the purposes of trade as defined under Class 1 of the Schedule to the Town and Country (Use Classes) Order 1972.

(3) Any question as to whether premises comply with the requirements in subsection (2) above at any time in the person's chargeable period shall be determined:


(a) if the premises have been in use for the purposes of the trade carried on by that person or by such a lessee as is mentioned in section 1(3) of the said Act of 1968 throughout the twelve month period ending with the last day of the chargeable period, by reference to those twelve months; or
(b) if the premises were first used as aforesaid on a date after the beginning of those twelve months, by reference to the twelve months beginning with that date

but retail premises shall not by virtue of this subsection be treated as complying with those requirements at any time after it has ceased to be so used.

(4) For the purposes of this section—

(a) there shall be treated as included in qualifying retail premises any building which is provided by the person carrying on the shop for the welfare of workers employed in the shop and is in use for that purpose; and
(b) where a shop is carried on by an individual, whether alone or in partnership, there shall be treated as excluded from qualifying retail premises any accommodation which is normally used as a dwelling by that person or by any member of his family or household.'.—[Mr. Graham Page.]

Brought up, and read the First time.

Mr. Graham Page: I beg to move, That the clause be read a Second time.
The clause seeks to end the discrimination in taxation allowances between expenditure in providing buildings for making the products of industry—manufacturing, processing trades and so on—and expenditure in providing buildings for selling the products of industry. There is that discrimination in our tax law.
I declare an interest because I am a director of a company which on occasion builds shops. However, I have no personal interest other than a small remuneration as a director.
In 1946, capital allowances were granted to those who produced industrial buildings. That was an incentive for manufacturing development given immediately after the war. The idea that the manufacture of goods is virtuous but the selling of them is sinful has permeated our tax law ever since, and was embodied in the Capital Allowances Act 1968.
There is no case in equity for treating factories as more deserving of tax concessions than are shops. The pattern of employment has changed considerably since 1946. I have figures for 1946 showing 6½ million people employed in manufacturing and 2½ million in the service


industries. The current figure in manufacturing is the same—6½ million—but 7½ million are employed in the service industries. The service industries now provide even more employment than the manufacturing industries. They also provide more unemployment, if I may put it that way, because when one looks at the qualifications or the trades of the unemployed who are seking jobs one finds that more are seeking jobs in the service industries than in the manufacturing industries. Nowhere is that so marked as in my constituency on Merseyside. There has been a considerable loss of manufacturing industry there—for example, in textiles. My constituency contains docks, and the number of dockers has been reduced from about 18,000 to about 6,000. Manufacturing and industrial jobs have declined and over the years employment in service industries has increased.
7 p.m.
The capital allowances that are made available to factories but are denied to shops are set out in the Capital Allowances Act 1968. These are the allowances which already apply to industrial buildings and which I wish to have applied to shop buildings. There is an initial 50 per cent. allowance on capital expenditure incurred in the cost of constructing a factory. There is then an annual allowance of 4 per cent. of the cost of construction until that and the 50 per cent. initial allowance are equal to the cost of construction. Effectively, therefore, the manufacturing investor gets full depreciation on his capital expenditure while the retail shop investor gets none.
There is a precedent for permitting buildings other than industrial buildings to qualify for capital allowances. Hotels fairly recently were included in the capital allowance provisions. That is a significant factor in my argument for shops being given the same concession. The concession to hotels was made in recognition of the hotel industry's contribution to the United Kingdom balance of payments by catering for the tourist trade.
It is worth considering, however, the contribution by retail shops to that trade. I have been given figures which show that shopping represents 25 per cent. of what we earn from foreign visitors and that 31 per cent. of what the visitors spend

is spent in the shops. Shops take nearly £1 billion from foreign tourists every year. If there is justification for granting this concession to hotels, there is all the more reason for it to be granted to the retail trade.
I have mentioned the changing pattern of employment since 1946, but there has also been a change in the pattern of shopping. It may come as a shock to some hon. Members, as it did to me when I read it, that the first supermarket—a shop of 10,000 sq. ft.—appeared in 1956. Of course, we are now into the phase of hypermarkets and hyper hypermarkets. There is a great advantage in terms of cost effectiveness with the large unit. Surveys and research have shown that on average goods are retailed very much more cheaply in the large unit than in the corner shop.
I am not saying that the corner shop can be dispensed with—far from it. However, large units deserve to be encouraged because they to some extent control inflation and provide a cheap source of purchases for the ordinary household. However, their very success makes it necessary for us to assist if we can the rehabilitation of the high street shop. It needs modernising and it needs encouragement to be modernised. A tax concession on capital expenditure would be of immense value in providing new shops and in reviving the high streets of our large cities.
I am thinking particularly in terms of our inner city centres. Frequently the areas outside the cities have been developed without the provision of proper facilities for those who are required to live there. That means that shops have not been built. Therefore, without those shops and without the revival of the shops in the city centres, substantial inconvenience is caused to the public in many areas.
A concession of this sort might be a key factor in the revival of city centres. It could very well encourage to go ahead those who might otherwise hold back from developing those centres which so much require development at present.
Here is a tax concession which could perhaps replace some of the subsidies which have had to be withdrawn, which could encourage the development of larger units to provide cheaper goods, and


which could encourage the redevelopment of the high street and the development of the corner shop. Great advantage could flow from it.

Mr. Tim Sainsbury: I wish to support my right hon. Friend the Member for Crosby (Mr. Page) and at the same time to declare an interest as a director and shareholder of a retailing concern, the name of which I shall not mention.
There are a number of reasons why we should not discourage investment in new retail premises. I say "discourage" because the absence of the allowance that my right hon. Friend proposes is a discouragement when one compares investment in retailing facilities with investment in industry and in hotels, to which my right hon. Friend referred and which recently were given a 20 per cent. allowance.
Industry has had this allowance for a long time. Hotels were given it partly because of the opportunity they provide to gain foreign currency earnings. As my right hon. Friend said, retailing also plays a major role in the important and growing tourist industry. That is the first of my reasons for supporting the new clause.
My second reason concerns the benefit that accrues to the consumer from the existence of more efficient retail premises. My right hon. Friend suggested that the first supermarkets did not appear until 1956. Although that was the year in which I became a full-time retailer, it was not the year in which the first supermarkets appeared. They had appeared by the early 1950s, and I believe that one of the co-operative societies claimed to have developed a supermarket in the late 1940s. The definition of a supermarket then was 2,000 sq. ft., but it is now normally 400 sq. metres, or 4,400 sq. ft.

Mr. Graham Page: I was taking the size of 10,000 sq ft to describe the first supermarket to be produced. That was in 1956.

Mr. Sainsbury: I noted the figure given by my right hon. Friend. That is an oversized definition of a supermarket. There are many efficient stores which are smaller than that. I stress that all studies show that large modern stores are very

efficient in a variety of ways. They have brought major benefits to the consumer, not only in the form of lower prices which derive from more efficient retailing but in the form of a more attractive environment and a better display and the wider range of goods that the consumer now expects to see.
Those areas which most noticeably lack the modern retail facilities are some of the inner city areas that are most in need of rehabilitation. In those areas we find that the cost of construction tends to be high. Therefore, anything that can be done to encourage the provision in those areas of the retail facilities that provide employment and a focus for a more attractive environment should command support.
Further reasons for supporting the clause are the benefits of safety, better working environment, and better hygiene that can be derived for both consumer and employee in modern retail premises. I should like to emphasise to my hon. and learned Friend the Minister of State that the absence of an allowance for retail facilities can distort investment decisions, because it is no longer true that there is a simple division between production and distribution. There are a number of functions that can be carried out at the place of manufacture, at the wholesale warehouse, or at the point of distribution. In the food industry, processing, packing and pricing can be carried out at any one of those locations. If there is a considerable allowance for the provision of new buildings in industrial premises and a total absence of allowance to do so in retail premises, we run the risk of distorting the investment decision, perhaps against the efficient operation of the economy. That might also lead to a withdrawal of employment opportunities from urban areas where they are most required.
I remind the Minister that the former Chancellor, in a letter dated 14 June 1977 to Lord Godber, said that he accepted in principle that commercial buildings should receive capital allowances. He pleaded at that time, as my hon. and learned Friend has just pleaded in respect of the previous new clause, that the cost of doing so was prohibitive.
I suggest to my right hon. Friend the Member for Crosby that he is going a


long way in suggesting that the whole of the industrial allowance should go to retail premises rather than perhaps the lesser allowance that goes to hotels as a first stage. I appreciate that even that carries a cost burden.
I hope that the Minister will confirm that he continues to accept in principle the proposal for commercial buildings and in particular retail premises which has been supported over the years by a very large number of inquiries. With his expertise the Minister is even more familiar with those inquiries than I.
I refer the Minister to the Millard Tucker report, the Royal Commission report on taxation and profits, the committee on taxation treatment of trading profits, and more recently the Sandilands committee report. All those reports supported the principle behind the new clause tabled by my right hon. Friend the Member for Crosby.
I hope that my hon. and learned Friend can confirm that at least the principle is still accepted. When financial circumstances are a little easier, in view of the distortion of investment decisions that can result I hope that the retail trade, which has a very valuable role in employment and the regeneration of inner city areas, can look forward with some hope of obtaining the allowances which industry and hotels receive.

7.15 p.m.

Mr. John Townend: I declare that I am a director of a retail concern.
I am speaking in support of the clause of my right hon. Friend the Member for Crosby (Mr. Page), but not on the basis that it is a necessary concession to the retail trade or on the basis of efficiency. I speak as a chartered accountant on a matter of principle. Any capital expenditure undertaken for the purpose of trade should be written off against profits over the life of those assets.
I do not request that retail premises should have the same allowances as industrial premises or hotels, but in equity it is logical that the principle should be accepted. The allowance should be about 2 per cent. to 3 per cent. per annum. That would enable the capital expenditure on retail premises to be written off against taxed profits over the life of those assets.

Mr. Sainsbury: Does my hon. Friend, as a chartered accountant, agree that that approach to the problem is reinforced by the new requirements for providing depreciation on buildings on freehold sites, which apply under the standard accounting procedure?

Mr. Townend: I accept that. If that were accepted the cost would not be nearly as prohibitive as the cost of accepting the clause. Even if the Minister is not prepared to accept the clause, I hope that he will accept the principle that moneys and capital expenditure spent on assets for the retail trade should be able to be written off, over the lifetime of those assets, against taxation. I make that plea on the ground of equity.

Mr. Adley: I have had a number of conversations with my hon. Friend the Member for Hove (Mr. Sainsbury) about the social value of supermarkets. It would be out of order to discuss whether they provide benefits to the consumer or destroy the attractive environment that was provided by the smaller shops.
My right hon. Friend the Member for Crosby (Mr. Page) highlighted an important matter that has been debated too infrequently in the House—the effect of the change in the face of Britain which the increase in service industries and the decrease in manufacturing industries has brought about in the last 25 years. It is generally assumed in the House that that is something that must be bemoaned. Many seem still to live in the great Victorian era when it was believed that unless one got one's hands dirty one was not doing an honest job of work. There is an educational task to be carried out which could start in the House by impressing upon the Treasury Bench the importance of the service sector of the economy in relation to the manufacturing sector.
I declare an interest in the hotel industry. I have for many years been the European marketing director of Commonwealth Holiday Inns of Canada, and I serve as a member of the national council of the British Hotels, Restaurants and Caterers Association. With that experience I cannot support the new clause because my right hon. Friend based it on the action taken last year in relation to hotels. The main reason why the Government succumbed last year to persistent pressure over many years to classify hotels


as industrial buildings for capital allowances was that they were convinced that the job creation and foreign currency earning aspects of the hotel industry had a part to play in generating economic growth, health and welfare.
Until last year's Budget Britain was the only country in the EEC in which hotels were not classified as industrial buildings. One of my reasons for being unable to accept the new clause is that in subsection (4)(b) my right hon. Friend seeks specifically to exclude from capital allowances
any accommodation which is normally used as a dwelling".
One of the great growth sectors should be the small hotel and guest house sector. It seems that my right hon. Friend has not fully considered the results that the new clause might have by inserting the provision to which I have referred.
If my right hon. Friend wishes to give to shops the treatment that hotels received last year, he has only to talk to local authorities. If authorities were asked whether they would rather have a new hotel or a new supermarket in the interests of the community, I have no doubt what the answer would be, from Land's End to John o' Groats.
I do not want to do the Government's job for them. Presumably we have a British Tourist Authority because successive Governments have decided that it is in the national interest to seek to generate income from overseas tourists. The authority is, of course, funded by the taxpayer. To my knowledge, there is no suggestion that we should have a British retail authority funded by the taxpayer to generate retailing income.
It is worth referring to a recent document issued by the British Tourist Authority, which states:
The existence of tourism, a minor part of all leisure activity but a major contributor in terms of wealth creation, employment and environmental conservation, conveys options for a community. However, the options in most cases are those of influencing growth, realising potential and minimising conflicts and costs. There can be no options which seek to turn back the clock to an age in which personal mobility was limited to a privileged minority.
I imagine that the previous Government had some of those generalised considerations in mind when they reached their decision in the previous Budget.
My right hon. Friend and my hon. Friend the Member for Hove both argue that tourists spend a great deal of money in our shops. However, the whole object of the British Tourist Authority is to get the tourists here. That is what the authority is for. That is why last year the Government created the new arrangements for hotels. If we fail to get tourists here in the first place, they will not spend their money on accommodation and they will not spend it in our shops and in all the other directions in which we know tourists spend money. One overseas visitor spends as much as eight British holidaymakers in our shops.
I do not normally see it as my duty to act as a spokesman for the Government, but I feel that in this instance I am being consistent. I hope that my hon. and learned Friend, who has heard me make speeches on this subject over the years, will give me credit for that.
I am sorry that the right hon. Member for Llanelli (Mr. Davies) has left the Chamber. It may be that he has left us because I told him that I would issue paeans of praise of him. Perhaps he thought that that would embarrass him. Last year the right hon. Gentleman and the right hon. Member for Heywood and Royton (Mr. Barnett) listened and responded to representations, and there are many who are grateful for that. Although the 20 per cent. rate that was produced last year, in contradistinction to the 50 per cent. rate for manufacturing industry, has not yet had a satisfactory incentive effect on investment, that was presumably the Government's objective.
We should be more prepared to differentiate between grants, loans and tax incentives. Tax incentives are produced to encourage investment. Her Majesty's Government benefit when tax incentives are produced only when the investor invests. The Treasury should be prepared to recognise that merely because one is advocating a certain tax incentive one should not be classified as someone who is recommending vast and indiscriminate handouts of taxpayers' money.

Mr. Peter Rees: My right hon. Friend the Member for Crosby (Mr. Page) has vast experience of Finance Bill debates. Over the years, I have been happy and privileged to support, with varying degrees of success, the various amendments


and new clauses that he has introduced. I am sorry that on this occasion I am unable to go all the way with him. I shall endeavour to explain why.
My right hon. Friend said that there is discrimination against a range of buildings as the present system of capital allowances affords relief only for industrial buildings as defined. It is a fairly technical definition. There is a smaller measure of relief which, dare I say it, was a triumph for my hon. Friend the Member for Christchurch and Lymington (Mr. Adley). That relief was introduced last year for hotels. Again, that is a rather narrowly defined definition.
My right hon. Friend has so drawn the new clause that he has left in a measure of discrimination. I understand the reason that led him to do that. For example, his new clause would not afford capital allowances for buildings from which insurance, banking and very various other service industries are conducted. I am not attempting to inject a moral note. I do not regard industry and manufacturing, however defined, to be virtuous and other forms of commercial activity to be less virtuous—"that way madness lies". It would be impossible to draw distinctions that I should feel able to defend with any degree of confidence from the Dispatch Box. So often distinctions depend upon history, and history is to be ignored at our peril.
In arguing against the clause, I am certainly not resting my argument on moral grounds.
I recognise the powerful argument that my right hon. Friend advances about city centres. That will no doubt find a sympathetic echo from my right hon. Friend the Secretary of State for the Environment. The argument of my right hon. Friend the Member for Crosby was taken up by my hon. Friend the Member for Christchurch and Lymington. In these debates I am grateful for support from whatever quarter, but I am particularly grateful to my hon. Friend. He and I have taken an interest in fiscal matters relating to hotels and a wider range of buildings over many years.
As a general proposition, the Government prefer a system of tax relief to a system of subsidies. There may be areas at the margin where subsidies are more

appropriate, but I have stated our policy in general terms. I do not think that I need open out the debate any further.
The expertise of my hon. Friend the Member for Hove (Mr. Sainsbury) is well recognised. He hardly finds it necessary, I believe, to declare his interest as it is so well known. I do not wish to debate with him the merits of the supermarket as against those of the corner shop. We recognise the benefit to the consumer of the most efficient form of retailing available, whether that is the large organisation or the small corner shop. Both forms of retailing have their advantages in a geographical and social context. I know where my hon. Friend's sympathies lie, but I shall not open out the debate to discuss those matters with him.
My hon. Friend referred to a letter written by the previous Chancellor of the Exchequer to my right hon. and noble Friend Lord Godber. The previous Chancellor accepted the principle that capital allowances should be afforded to all commercial buildings. That argument was taken a little further by my hon. Friend for Bridlington (Mr. Townend). I was interested to hear his contribution. He said that all capital expenditure should be written off for tax purposes over the years. I see the force of the argument. This is the point to which we are led inexorably, and perhaps not unattractively, by this kind of new clause.
7.30 p.m.
I come to the case that I must deploy against the new clause. I agree that, in essence, it is the most unattractive case—apart from that which rests on administrative convenience—that any Treasury Minister can advance. It is the pure question of cost. The best estimate that I have been able to find of the cost of the new clause is that it would rise in a full year to about £230 million a year. If all commercial buildings were to attract capital allowances, in the first year it would cost about £350 million. In a full year—it might take a period of years to reach this figure—it would cost between £1,250 and £1,500 million.

Mr. John Townend: Does my hon. and learned Friend agree that if the allowance were made on a straight-line basis over the lifetime of the assets—say, 2 per cent. to 3 per cent. a year—the cost would be much lower?

Mr. Rees: Of course. I am not saying that there are no other ways in which we could build safeguards. Eventually, if we adopted the allowances at present conceded in industry, the cost of allowing a write-off of all capital expenditure—I do not have the exact figure—would be of still greater magnitude.

Mr. Adley: Did my hon. and learned Friend say, on the costs he produced, that there was no shortage of evidence that large store companies were not building stores as a result of the present tax regime? Therefore, is he producing figures because he knows that those firms will continue to build stores because the present tax regime is suitable? What we must do is to look at industries such as the hotel industry, where new hotels are not being built because the tax regime is opposed to them. Should not a fine differentiation be drawn between the figures that he gave on the assumption that things would go on as they are anyway and the assumption that the hotel situation was totally different as the investment simply was not taking place?

Mr. Rees: My hon. Friend has made a close study of these matters. I refer to the point made by my hon. Friend the Member for Hove. The existence of these allowances distorts investment. Business men rightly and astutely angle their investment to get the best return. That means to what extent they can take up the capital allowances or other reliefs that are available. However, I take the point.
We are eventually led to the point about which my hon. Friend the Member for Bridlington argued so persuasively. Should we perhaps give reliefs for all capital expenditure? There is a powerful case for that. That opens up the whole question of how far we should erode the base for corporation tax or income tax under case 1 and case 2 of schedule D. Should we go for a narrower base at higher rates or for fewer reliefs and lower rates? That is a slightly wider issue than is presented in the new clause.
I come back to the focal and perhaps not unattractive argument that the cost of this modest proposal would nevertheless be considerable. I am sure that my right hon. Friend wishes us to debate the principle. I hope that he will not press the clause to a Division. Against the

background of which this Finance Bill has been constructed, £230 million is a considerable sum. If we are led on to consider the wider aspects touched on by my other hon. Friends, we should have to recast our ideas about corporation tax and the taxation of business profits generally.
We are contemplating a review of corporation tax. That is an important issue. The question of how far we perpetuate our existing system of allowances and reliefs is a central issue. We shall pick up the point made by my right hon. Friend the Member for Crosby in moving the new clause. I hope that against that background, and recognising that we have had an extremely useful debate on the principles involved, he will withdraw the new clause.

Mr. Graham Page: I am grateful to my hon. and learned Friend for the information he gave us on, for example, the cost of accepting a new clause of this kind. We must take that carefully into account.
I do not begrudge the commercial of my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) on behalf of hotels. I was not trying to knock hotels. Therefore, I ask him not to knock my new clause. He may wish to propose amendments to the new clause to preserve the rights of hotels. However, his commercial for the hotels had nothing to do with the case that I put forward on behalf of the retail industry.
The figure of £230 million a year as the cost of the new clause was a little lower than I thought it would be. I knew that it would prove expensive, but one always puts the asking price high.
In moving the new clause, I indicated that it would have a great value geographically in city centres. We might say that we ought not to grant the whole of the concession but only a percentage such as is granted in the case of hotels. When my hon. and learned Friend considers the matter, I hope that he will take that point into account. It would be extremely useful in some areas, especially the city centres, when an allowance might be less than the 100 per cent. of the industrial building allowance.
I am grateful to my hon. and learned Friend for the information he gave us and for the way in which he received the new clause. I hope that we shall return


to the same principle, if not in detail, at a later stage.
I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 13

ACCRUAL BASIS OF ASSESSMENT OF INTEREST ON COMPENSATION

Where property is acquired by an authority (having powers of compulsory acquisition) and where interest, which has accrued due (on unpaid compensation for an acquisition) during more than one fiscal year, is paid by the authority in one year, such interest shall for tax purposes be deemed to be income of the recipient in the year in which it accrued due.—[Mr. Graham Page.]

Brought up, and read the First time.

Mr. Graham Page: I beg to move, That the clause be read a Second time.
The heading is a rather complicated description of the new clause. However, it is a simple point which, I think, can best by illustrated by example.
The new clause seeks to ensure that interest on compensation paid for property acquired—whether compulsorily or by an authority which has compulsory powers—is assessed in the right year on the taxpayer who must pay tax on the interest.
When land is compulsorily acquired, the acquiring authority usually enters into possession long before the compensation is paid. When a local authority or Government Department acquires land for a public building or road, it will enter on the property before the compensation figure has been settled. The process of determination of compensation often involves long proceedings, perhaps finishing up before the Lands Tribunal. It is not unusual for anything between six and 10 years to be taken to settle the compensation. In that time there is the statutory authority for the payment of interest on the compensation from the date the authority enters on the land. In providing for interest to be payable from the date of entry, Parliament obviously intended that the person whose land was being taken away, and who was dispossessed of his land, should receive from that date an income equivalent to that

of which he had been deprived by the compulsory acquisition of his property.
I will give an example which, except that I will give it under fictitious names and in round figures, represents an actual case of which I am aware. Let me call the owner of the property Farmer Giles. He has 10 acres of his farm taken away from him—for the purpose of motorway No. 1000—by the Department of Transport. The Department enters on his land as soon as it has served him with the necessary notices. In this case it does so as long ago as 1972. Two years later, in 1974, the Department makes him an interim payment of £50,000 on account of compensation, but makes no payment of interest.
Then another two years go by and the Department of Transport agrees that the total sum in compensation should be £75,000. But, of course, it does not pay that sum at that time. There is always a lapse of time between agreeing the compensation and the payment being made. It is not, therefore, until 1977 that the Department of Transport pays the balance of compensation, namely, another £25,000, and with it the interest calculated over the several years since it has taken possession of the property.
As hon. Members will know, the rate of interest payable alters frequently. Statutory instruments go through this House altering the rate of interest on compensation sometimes twice a year. At any rate, they are very frequent. The calculation of interest in this case, over that period of some six years, is £20,000 as a round figure.
The inspector of taxes for Farmer Giles assesses the whole of that interest, the £20,000, in the year in which it is paid, 1977, although it has accrued over the years from 1972 to 1977. The result of that on Farmer Giles' income is to put him up to a rate of 98 per cent. on that £20,000. I know that I shall not get much sympathy for a 98 per cent. taxpayer, but it is an exaggerated example. But in many other cases, when seven years' interest is assessed and paid in one year, it may frequently change the tax rate on someone's income.
It seems to me that the fair thing to do in the case I have mentioned would have been to apportion the interest over those six or seven years, calculate it on an


accrual basis, and charge it in each year in which it accrues. It may be that in future this will not be so serious because, with the reduction in the rate of tax, it may be an advantage to be taxed in the year in which the payment is made and not in the year when it accrued. But it would need a very considerable reduction in the rate of tax to make that beneficial in most cases where large figures result, because frequently the fact of payment in one year may change the rate of tax for that year very considerably.
It is rather like the case of the actor who gets a very good part in one year and is resting for several other years. It is like the writer who writes a book and gets good royalties in one year and very little in other years. Both the actor and the writer suffer on this account. But there is no need in this case for Farmer Giles to suffer if the right assessment is made. Even with the law as it stands, I think the right assessment should have been for the years of accrual. But in order to make that quite certain for the future—and I would hope that it could be retrospective in some cases which have already been settled—there should be some provision such as that set out in new clause 13.
I doubt whether there can be any objection to the drafting of the new clause, because it is so simply worded. I have no doubt that my hon. and learned Friend may have been advised that something is wrong in the drafting of it, but I hope that, if there is something wrong in the drafting, he will accept the principle.

7.45 p.m.

Mr. Peter Rees: My right hon. Friend the Member for Crosby (Mr. Page) has argued his case with his customary eloquence and lucidity, if he will allow me to say so. The principle needs no particular debate.
My right hon. Friend and the House will recall that there are echoes in his new clause of what was section 31 of the Income and Corporation Taxes Act 1970, under which it was possible to spread certain dividends—and interest payments—over a period of years if they represented the income of those years. That provision was eventually removed from the statute book because it added marginally to the cost of administering the tax

system, and, indeed, not many taxpayers took advantage of it.
My right hon. Friend makes a powerful case in equity. I would not have the temerity to point to any technical defects in his new clause. I recognise his skill as a draftsman and have done so over many years. He will recognise, however, that the provisions would be rather haphazard in operation. It is not an option given to the taxpayer, as in the case of section 31. It would be mandatory in its operation and it would not, in every case, benefit the taxpayer. It would depend on the years in which the liability arose and on the taxpayer's other income for those years. I am not ceain in that all taxpayers would bless him for that.
My right hon. Friend was fair enough to recognise that the need for the new clause has been considerably reduced by the lower rates of tax proposed in the Finance Bill. Indeed, I hope the Government will move on from that and reduce the rates even further. Although the point is a real one, and I recognise it, I believe that the pressures in the country are not very great and hope that my right hon. Friend will recognise that they are outweighed by the administrative complications and the haphazard nature of the relief.
My reluctance to oppose my right hon. Friend is tempered a little by the fact that it is always open to a person who has his property acquired under the powers of compulsory purchase—my right hon. Friend will recollect section 52 of the Land Compensation Act 1973—to have a considerable proportion of the compensation paid to him by the local authority or the acquiring authority on entering. It lies to a degree in the power of a person in that position to control his tax liability. He is able to press, should he so wish, to have the compensation paid to him at an earlier date than might otherwise be the case.
Against the background that the taxpayer has a limited power of controlling this problem, and against the background of the slight administrative complication and the haphazard nature of the provision, I hope that, although I recognise my right hon. Friend's fundamental point, he will not feel it necessary to press his new clause to a Division.

Mr. Graham Page: I am very disappointed that my hon. and learned Friend should use the housemaid's excuse that it was "only a little one". I am rather shocked that he should say that for administrative convenience we ought to discard the arguments on this matter. I had thought, after tabling the new clause, that it might have been better to make it optional, so that the taxpayer would have the choice whether to be assessed all in one year or on an accrual basis. In many cases in tax provisions it is optional on the taxpayer to choose the best for himself, provided that he pays under one scheme or the other. Just to cast this aside and say that it does not affect many people and it ought to be optional is very unsatisfactory from my point of view. I hoped for a better answer than that.
At this stage of the Finance Bill, when we are on Report, and expecting Third Reading later tonight, there is little I can do except to lay down a marker so that when we come back to a more technical Finance Bill—as I hope we may do during the course of the year, and before we get round to the next Budget Finance Bill—this will undoubtedly be a matter that I shall seek to raise again. Under that threat, I beg to ask leave to withdraw the new clause.

Motion and clause, by leave, withdrawn.

Clause 1

INCREASE OF VALUE ADDED TAX

Mr. John Garrett: I beg to move amendment No. 3, in page 2, line 32, at end insert:
'(6) As from the passing of this Act subsection (1) above shall not apply to the supply of tickets for a live theatre performance.'.
In earlier debates the Chief Secretary has refused to make exceptions to a flat rate of VAT on the ground that it was inconvenient to make distinctions between different classes of goods. We are now at the stage where we are not discussing taxation on goods but taxation on ideas and entertainment, what one might call two of the mainsprings of our culture. We believe that there is a very clear case for an exception to the recent increase in VAT imposed on tickets for live theatre performances.
We must look at this proposal to raise taxation on theatre tickets in the context of other aspects of the Government's policy towards the arts. The general secretary of British Actors Equity Association, Mr. Peter Plouviez, summed up this threat to our theatre in a statement on 12 July when he said:
The Budget represents an unmitigated disaster for the live theatre and those who work in it. The amount of State and local government subsidies to the theatre in Britain has for long trailed dismally behind that for other European countries. For instance, two years ago West Germany spent 14 times more per head of their population than we did on the live theatre. It is a bitter irony that after all their encouraging and seemingly enlightened talk about the Arts immediately prior to the election, the Conservative Party when in Government, has instantly made an unprecedented cut in the Arts Council grant and threatened the existence of much of what is left of the non-subsidised theatre by the massive increase in VAT on theatre seats. As if this were not enough, the effects of the cuts in local government expenditure will almost certainly lead to closures of some theatres, the disappearance of some companies and even more unemployment for British performers.
Wittingly or not, this Finance Bill is part of an attack on the live theatre by the Government. For example, local authority cuts will grievously harm the live theatre in Britain. Touring theatre companies are heavily dependent on theatres supported by local authority grants, and as local authorities are likely to reduce those grants because other services take priority, those theatres and touring companies will be in jeopardy. There will be no increase in support for subsidised repertory theatres which are nurseries for talent for commercial theatre and television. Already many theatres do not know what support they are likely to get for the present year. Therefore, because of local authority cuts, the theatre suffers very much indeed.
When it comes to cuts in grants for the Arts Council, these will take a further toll on the live theatre. It is likely that one of our great national ballet or opera companies will have its grant cut altogether, which means extinction for companies that have taken many years to build up. Apart from the National Theatre and the Royal Shakespeare Company, the Arts Council gives only £8 million in a year for all drama to 100 companies. Yet some individual Continental companies receive more than the total drama allocation in Britain.
Live theatre suffers greatly from the effects of inflation, as might be expected, because it is so labour-intensive. An increase in the rate of VAT can cause more theatres to lose money and many have suffered losses already. A small provincial theatre might have to find an extra £1,000 per year for every 1 per cent. increase in the rate of VAT. Many such theatres, including some in the West End, are already running at a loss. In my own constituency, the Theatre Royal in Norwich, which is known throughout the country as an extremely successful company and is a theatre which provides entertainment not only for the city of Norwich but for the surrounding counties as well—perhaps for all East Anglia—has discovered that its VAT bill will rise from £28,000 to £52,000 in this year alone. The cost of that theatre's annual pantomime this Christmas will be 14 per cent. more because of this increased rate of VAT.
In other EEC countries it is common to have a lower rate of VAT for the theatre. Now that we have pitched our flat rate at such a high level, there is a much better case for having a lower level for the theatre. In France the general rate of VAT is 17 per cent. but the theatre rate is 7 per cent. In West Germany the theatre is totally exempted from VAT. In Italy the general rate of VAT is 14 per cent. but the rate for the theatre is 6 per cent.
It is estimated by Equity that the cost of mounting productions will rise by 6 per cent. alone as a result of the impost on the theatre by the Government, leaving aside any effects of inflation as a result of wage settlements or other costs. It already costs £400,000 to mount a large-scale musical in the West End. Recently ticket prices have increased by about 50p so that the top price for a popular production in the West End now runs at £6·50 or more. Managements are already beginning to notice that they are charging more than the market will bear.
As a result of this new impost, managers will be less willing or able to nurse a show to profitability. They will be less willing to take risks with new productions. It will be more difficult for new writers, actors and directors to break into the world of the theatre. In some subsidised repertory theatres it will simply not be possible to raise prices or to secure

greater increased grants or subsidies. Extinction will be the real risk for such theatres.
I am aware that the Treasury is always keen on hard economic and accounting arguments, so let us consider the effect on the tourist industry and the contribution made to the tourist industry by live theatre. A survey by the British Tourist Authority has shown that 50 per cent. of foreign tourists give a visit to the theatre as one of their main reasons for coming to Britain. Foreign tourists spend £1½ million a year in Britain. It has been said that our theatre is the equivalent of the sunshine of the Costa Brava when it comes to attracting tourists to Britain. It is one of the reasons why so many tourists come to London. So there is a good economic argument for relieving the theatre of this new impost.
The argument about our theatre is not primarily one of accountancy or economics; it is an argument about the values in our society. We may not be that good as a nation at making and selling goods, but we are outstandingly successful in the world of theatre. On any account British theatre is one of the greatest achievements of the human spirit over the past 30 years. Throughout Britain, from small local repertory companies to the Royal Ballet and the Royal Shakespeare Company, our community has created an artistic and intellectual achievement no other country can match. In turn, the strength of our theatre has given us the best television in the world.
Our live theatre is a ferment of innovation, challenge and experiment, yet very few people make much money out of it. The top wage in 50 per cent. of our subsidised theatres is under £70 a week. An artist can spend years training for ballet, finally make it and be paid £42 a week. The increase in taxation on this precious national and international asset is an act of crass philistinism and destructive of the life of our community.
Over the past five years the present Minister with responsibility for the arts pranced all over the artistic landscape, waving his wooden sword and declaring his dedication to the arts in general and the live theatre in particular. To see how he has given in to the blue meanies in his party is most depressing and is hypocritical.
I hope that the Minister of State will be more amenable to these arguments than the Chief Secretary. The Minister of State should look up from his pocket calculator just this once and consider the wider issues of culture in our society. He should give a little by enabling the live theatre to have a lower rate of VAT on its tickets.

8 p.m.

Mr. Norman Buchan: I hesitated to speak because I hoped that a large number of Conservative Members would get up to support the amendment. At one time the Tory Party and the class that it represents were the great patrons of the arts. They have now deserted that fairly noble role. Thank goodness for the philanthropy of the earlier Tories. Disraeli and others must be turning in their graves.
I am pleased that we are discussing the amendment, because we had quite a fight about it during the earlier stages of the Bill. We thought we saw a significant nod that indicated some kind of support from the Leader of the House, who finally stopped his prancing around with his wooden sword for six years. I think that it was Harlequin who had the wooden sword. If we have to thank the right hon. Gentleman for this amendment, we are grateful. However, we are grateful for little else, because according to a report in The Guardian today he has already lost the battle. The Guardian states:
The reductions in arts subsidies, which are expected to intensify in the next financial year, will force the Arts Council to consider withdrawing its grant-in-aid to one of the major national arts organisations, such as the London Festival Ballet, the English National Opera or the Royal Ballet's touring company. Such an action, defended on the grounds that it would save the closure of more than half a dozen regional repertory theatres …".
That is the sorry pass that we have reached, not only in relation to the VAT impost, but also in regard to specific cuts in support for the arts—either support for the regional theatre or the closure of one of our major artistic companies.
I listened with great attention to my hon. Friend the Member for Norwich, South (Mr. Garrett) and to his praise for the Theatre Royal. I saw "Bartholomew Fair" there a year ago, and a

very good production it was. Perhaps my hon. Friend is beating his luminous wings in vain by trying to appeal to Conservative Members to respond to the real merit of the amendment, which, as he pointed out, is not an economic one but rather is in defence of what has been the glory of England. I believe that we have now reached the point at which the basic Conservative ideology of the free market—that which people are prepared to pay for is that which is valuable—has closed its ears to any appeal on something higher than the level of cash. Therefore, let us look at cash.
Some Conservative Members may have read the book by Bernard Nossiter entitled "A Portrait of Britain". He is an American correspondent for The Washington Post, and is a good friend of this country. In that hook he says that relatively Britain has been doing badly compared with some of its Western European competitors, but he urges us to look at some of the other aspects of British life. Among the other aspects that he picks on as being in the lead in the world are the theatre and the arts. Even on the level of tourism, as my hon. Friend pointed out, this is one of the factors that brings many people to this country.
The threat faced by the theatre is very real. Actors are among the worst paid in this country, and it is to our disgrace that that should be so. Over the last few years they have been restricted by an honourable adherence to incomes policy, but now they, too, require honest pay for their honest trade. However, we are told that if this were to happen it would create a major strain. For example, we are told that the Royal Opera House and the English National Opera would face an increased wage bill of between 10 per cent. and 12 per cent. for their choruses, which would have a serious effect on their future operations.
It is against that background of cuts that we must estimate the question of VAT. We should not be arguing for a tax standstill. If there were any understanding of background and culture among Conservative Members, they would be in the lead for arguing not for a standstill but for a zero rating of tax. In France the theatre rate is 10 per cent. below the general VAT rate—7 per cent.


instead of 17 per cent. In Western Germany there is complete exemption for the theatre. It must be remembered that these countries also spend considerable sums of money in support of the arts. For example, the State Opera in Hamburg alone receives more in its annual grant than we in Scotland receive for the entire Arts Council budget and other support from local authorities. That is the light in which we must look at this new act of meanness and philistinism.
My hon. Friend the Member for Norwich, South was right to point out that there is yet another factor against which this must be weighed. If it is right that the Leader of the House has lost his battle in the Cabinet, and if it is right that we shall see a direct cut in support for the arts on the ground that it is not profitable, there are always the local authorities, which in the past have succeeded in supporting the arts. But they, too, are being subjected to an intolerable strain. For example, it has been seriously suggested in Scotland that as a means of saving money local authorities should consider abolishing concessionary fares. As a result local authorities have been put in the intolerable position of choosing between the need to support the aged and others or support the arts. Against that background, it will be difficult to put up a major fight on behalf of the arts. That is the background against which we must view this VAT impost.
I hope that it is not too late to appeal to Conservative Members to join us in the Lobby tonight. I hope that it is not too late to appeal to the Government Front Bench to give way. It would be a little candle glowing in a naughty world if the Minister of State were to stand up and say that he accepts the amendment. It would give a little heart to people throughout Britain that the Government—terrible, reactionary and stupid as they are in their economic policies—will not compound that by showing such crass philistinism. The argument should be for zero rating and for increased expenditure on the arts. That should be so for the prestige of our country as well as for our economy. Even at this last moment, I hope that the Minister of State will respond.

Mr. Keith Wickenden: I find it difficult to take seriously the arguments of Labour Members. While

the hon. Member for Norwich, South (Mr. Garrett) was describing Conservative Members as philistine in their desire to impose VAT on the performing arts, I slipped out to pick a selection of shows that are currently showing in London and which under the amendment would henceforth be exempt from VAT.
Without too much difficulty, I saw advertised the following shows. At the Comedy there is "The Rocky Horror Show", which presumably Labour Members would exempt on the basis that it was an entertaining simile to the recent general election result. At the Criterion one can see "Bent", and at the Prince of Wales "Bedroom Farce". Elsewhere there is "The Festival of Erotica" and there is a play at the Shaftesbury which is described as a "bawdy comical musical". At the Windmill there is a show called "Rip Off". Why should this particular area of the entertainment industry be exempt?

Mr. Buchan: "Bent" is a most important play. It is well written and, above all, well acted, with people such as Ian McKellen in it. It is a plea for human compassion and understanding. The hon. Gentleman must not go by the advertisements that appear in the Evening Standard or by the titles of the plays. If he had his way, most of Shakespeare would be thrown in the dustbin. The hon. Gentleman should have a look at the last scene of "Hamlet", where the stage is strewn with bodies. No doubt he would reject that as sex and violence. It has both, and a very good play it is, too.

Mr. Wickenden: All I am saying is that such shows, or even plays by Shakespeare and Marlowe, have no more merit than does a county cricket match at Sussex, and it is not proposed to exempt that from VAT. No one is suggesting that Chessington zoo should be exempt, despite the educational value of its entertainment, and no one is suggesting that restaurants should be exempt, despite their assistance to the tourist industry.

Mr. Andrew Faulds: May I ask the hon. Gentleman—this cultural Neanderthal—where he was educated?

Mr. Wickenden: I was educated in many of the theatres that the hon. Member for Warley, East (Mr. Faulds) has


not frequented lately and which do not show the sort of shows of which I have been speaking. The argument is whether a particular area of entertainment should be zero rated.

Mr. John Garrett: The hon. Gentleman should read the amendment that we are discussing before embarking on a new, brutalist attack on everything cultural in our society. It is clear that he does not even know what we are discussing.

Mr. Wickenden: On the contrary; the hon. Member for Renfrewshire, West (Mr. Buchan) put in a plea for the theatre to be zero rated, and I was referring to his remarks. Surely the question is whether we should exempt one small section of the entertainment industry without being equally fair to others. It would be patently absurd to the hundreds of thousands of people who support other sections of the entertainment industry if we did that. It may be seen to be not an arts attack but a class attack on the other sections.

Mr. Phillip Whitehead: I have sat in this House for nine years. I never thought that I should live to see the day when "Hamlet" was compared with Sussex, of all teams in the county championship, or, indeed, with Chessington zoo. The hon. Member for Dorking (Mr. Wickenden) appears to think that Chessington zoo and "Hamlet" are on the same level of entertainment. He should not have intervened in the debate before doing us the courtesy of at least reading the amendment.
8.15 p.m.
I have two points that I hope will be seriously considered by Treasury Ministers. First, we already sponsor and assist many forms of cultural activity in this country through VAT zero rating. I declare an interest as an executive member of the council of the National Book League. We are grateful that books have always been zero rated, but it is an absurdity that we can read Mr. Tom Stoppard's "Night and Day" without paying VAT but have to pay VAT to see the play.
The addition of VAT to prices in some theatres in the West End may not put them out of business. The hon. Member for Dorking should consider, however, how many plays that are generally sala-

cious and intended purely to draw in large audiences of gullible tourists will not only survive but become the staple fare of the West End if costs rise to such a degree that the experimental theatre—that genuinely serious theatre—cannot be pursued. I do not believe that he was making a serious point, as I feel that he does not know what "Bent" is about. He was going purely by the title.
He was trying to make the point with the range of titles that he read out that a great deal of material in the live theatre does not need subsidy because it has no intrinsic artistic merit. If for the purposes of argument we accept that, precisely the same consideration can be applied to the zero rating of books. Many books are not of intrinsic artistic merit. Nevertheless, in order to preserve the cultural impact of books in general they get through, and that is a price that most civilised people are prepared to pay.
My second point specifically relates to local theatre, and subsidised repertory theatre in particular. I deeply regret that the Chancellor of the Duchy of Lancaster and Leader of the House of Commons, having for so long maintained that he is a great friend of the arts, is now heavily hammering the Arts Council. Whatever play is running at the Whitehall theatre in this Parliament, it will not be "The Norman Conquests" but "Norman Conquered". The right hon. Gentleman has been overthrown when it comes to the support of the living arts and the sustenance that the Arts Council needs and deserves.
Local repertory theatre will be hit simultaneously by an increase in seat prices through the imposition of the higher rate of VAT and the progressive withdrawal of Arts Council subsidies. A few weeks ago I went with an all-party deputation from the city of Derby to the Arts Council to plead the cause of the Derby Playhouse. On its present Arts Council grant it cannot put on plays with a large cast. It cannot pay the wage bill, and the cost of mounting such a show is prohibitive. It is limited to a range of plays—some of them very good—that are family entertainment and not of a particularly demanding or experimental nature. Such theatres with a good local reputation will find themselves further put at risk by the progressive foreclosing of Arts Council support, and


they will have to charge more than the market will bear because of the increase in VAT. I do not want to see that, and there must be some Tory Members who do not want to see it either.
A genuine exception should be made in the case of the live theatre, and I hope that the hon. and learned Gentleman will acknowledge that exception. If he does not, we shall go a long way to killing the live theatre, which has been one of the great glories of Britain as a civilised society.

Mr. Peter Rees: Whatever the motives that led Labour Members to put down the amendment, their contributions to the debate have generated more heat than light. They have described myself and my hon. Friends at varying points as ignoramuses, Neanderthal men, crass philistines and blue meanies. The hon. Member for Renfrewshire, West (Mr. Buchan) asked why there were not more Tories in the Chamber to support the amendment. I believe that that is because they do not take it seriously, for reasons that have emerged during the debate. We are not debating the attachment of either party to culture in the round or who is more dedicated to the support and advancement of culture. We are debating a precise and specific issue—whether a particular element of our cultural activities or, as my hon. Friend the Member for Dorking (Mr. Wickenden) chose to put it, a particular aspect of the entertainment industry should be exempt from VAT.
Labour Members are apt to affect to speak for the ordinary working person, as they choose to describe him. In the debate there have been speeches as supercilious as any I have heard in my limited time in the House. I hope that the hon. Member for Renfrewshire, West will explain how he reconciles his position in the debate with the attitude adopted to other aspects of VAT when Labour Members affect to have a monopoly of compassion and understanding of what the ordinary working person thinks. My hon. Friend the Member for Dorking spoke with a good deal of earthy common sense and probably more truly appreciated the sentiments of ordinary working people than the hon. Member for Renfrewshire, West. That, however, is not the point of the debate.

Mr. Buchan: I have never heard such crass elitist, anti-working class snobbery in my life. The hon. and learned Gentleman appears to be proclaiming that the arts and theatre are only for educated morons like the Tories, that the working people of this country cannot appreciate them and we cannot therefore be speaking for them. If that is so, I find it contemptible and offensive.

Mr. Rees: That is an absurd distortion. In fact, the hon. Member's contribution was as supercilious as any I have ever heard. No wonder we did not take it seriously.
How far should we go in creating a specific class of activity that is zero rated or taxed at a lower rate? The hon. Member for Norwich, South (Mr. Garrett) widened the debate into a general discussion about culture and the question of which Government have done more. We do not mind that, but there was an unwarranted attack on my right hon. Friend the Chancellor of the Duchy of Lancaster, who has consistently championed and defended the cause of the arts.

Mr. Faulds: He used to.

Mr. Rees: I should point out that the Arts Council provision for this year will be £60 million. The cuts which have taken place generally have fallen far less heavily on the arts than on anything else. Labour Members should ponder on that before scraping around for ways to attack this Bill. That sort of behaviour will not endear them to people outside who think more deeply about these problems.
The hon. Member for Renfrewshire, West spoke about past Tory patrons of the arts and what they had done. He seemed to speak in a rather approving manner. Therefore, he should support the cuts in higher rates of tax because this might facilitate present-day Tory patrons.
The question that we are debating is whether the live theatre, however it is defined, should be charged VAT at a rate lower than 15 per cent. That is the real point.

Mr. John Garrett: The Minister seems not to understand the fact that we take this matter very seriously. He is replying with his usual flatulent self-esteem. However, we really believe that this amendment is of crucial importance to


the theatre, which provides both entertainment and education and which is often the foundation of our best television. Why does the Minister believe that it is supercilious to defend the theatre?

Mr. Rees: The Government are not attacking the theatre. It is an old debating trick to attribute to one's opponent a position that he has never taken. We do not contemplate an attack on the theatre. We are simply debating whether special exemption from VAT should be made for the live theatre, however that is defined.
The amendment draws no distinction between the various types of theatrical performance. My hon. Friend the Member for Dorking has demonstrated how indiscriminate this relief would be if the House were foolish enough to accept the amendment. I need not go through the various types of performance which would attract this relief. The Opposition seem to think that the amendment would single out only those cultural and theatrical activities of which they approve. However, the amendment is not drawn in that way, and there are technical defects as well.
The fact is that in practice every kind of theatrical performance, whether it was at the Old Vic or some striptease, would attract a concession on VAT.

Mr. John Garrett: Yes.

Mr. Rees: The hon. Member says "Yes", but that is not a sensible approach to the problem. Since he has broadened this debate into one about culture generally, why is it right to single out the theatre? Why should we not consider a special rate for the sale of pictures or sculpture? This suggests that the debate is specious.
Labour Members have attempted to demonstrate during past weeks that they have a monopoly on compassion. Tonight they claim that they have a monopoly on culture. That argument will not commend itself to my hon. Friends, and I suggest that we should reject their arrogant pretensions, just as we should reject their ill-thought-out amendment.

Mr. Faulds: We have had a fairly lively little debate on culture. I thought that it would have been a quieter even-

ing, but I am delighted that a great crowd of my colleagues has flooded into the Chamber tonight to join in the discussion.
The debate has been revealing for two reasons. We have had the true Tory elitist approach peep out in the arguments of the Minister, and the more empurpled the hon. and learned Member became, the more convinced I was that he was embarrassed by the things he was having to say to defeat this amendment. The real revelation of the evening was the cultural contribution made by our new colleague—I wonder how long he will hang around with those views—the hon. Member for Dorking (Mr. Wickenden). In my 14 years in this House I have never heard such absolute crap from anybody on any Bench in the House. However, because we want lively contributions, I hope that the hon. Member will join in on future occasions.
I hope that what I said did not cause you any distress, Mr. Deputy Speaker.

Mr. Deputy Speaker (Mr. Richard Crawshaw): It did indeed. I think that the hon. Member could use other words

Mr. Faulds: I have a large vocabulary, Mr. Deputy Speaker, and I promise that next time I shall choose my word with much more care.
The Labour Party is fortunate in any matters to do with the arts. If my excellent services were not available as shadow spokesman, there are numberless other members of my partly who could speak as competently, effectively and as concernedly as I. On these occasions we would always rise to defend the practitioners of the various branches of the arts and to protect the cultural lifeblood of our community from the bleeding attacks of the present Government—and I use that word in both connotations.
The Conservative Party is less fortunate in these matters. It has a number of Members who are acquisitive collectors and habitual theatregoers. The former are more interested in possession than appreciation, the latter more concerned with social occasion and society tittle-tattle than the survival of the theatre. The theatre is an art form which is in danger of decline and disappearance unless it is given Government subvention to keep it alive. That is why we have tabled the amendment.
8.30 p.m.
Although the Conservative Party may have made the electoral pretence of being the party of civilised living—that may be difficult with the hon. Member for Dorking in its numbers—and cultural concern, its record in performance in Government in support of the arts does not compare with the sustained and increased expenditure on the whole range of the arts that Labour Governments have provided over the years. The trouble with the Conservative Party is that everything has a price. The performance and life of the arts is beyond price—it is beyond pricing. Very few Conservative Members realise that.
One such Member is the renowned spokesman for the arts, the enlightened, effete, the ecumenical the right hon. Member for Chelmsford (Mr. St. John-Stevas). He is one of a tiny Tory minority who actually appreciate the arts. In February of this year, when he was in Opposition, he wrote of the national scene in Classical Music Weekly:
One sphere which, because of its record of economic success, has a unique claim on public investment is the arts.
And then there is a deal of vague verbiage which is the sort of stuff that the right hon. Gentleman usually goes in for. Then he has another telling phrase:
So there is a case for increased public expenditure on the arts"—
the words of the right hon. Gentleman himself. Everyone on this side of the House would endorse those words. Collectively, we were as delirious as Dervishes at the spate of promises that poured from the mouth of the right hon. Member for Cheltenham before the election about the enhanced prospects—

Mr. Peter Rees: Before the election my right hon. Friend was the Member for Chelmsford.

Mr. Faulds: I should have known that. I always call him by a more affectionate title.
The enhanced prospects for the arts under a Conservative Government seemed to be enormously enriched. Even the present Prime Minister—I am not of course making a personal attack—never renowned for ever having expressed any concern for cultural matters nor for having shown any artistic taste whatso-

ever, even when she was Secretary of State for Education and Science—and some of us remember those days—

Mr. Buchan: Museum charges.

Mr. Faulds: That is another matter. Let us not get drawn into that. Those charges may be brought back under this crowd. Even the right hon. Lady promised the country that there would be no "candle-end savings" where the arts were concerned.
And what happened, Mr. Deputy Speaker, when the Conservatives were returned to power? In the Budget a sustained attack was mounted on all the factors that prop up the life of the live theatre. First the audience. With all the fancy talk about more money being left in people's pockets because of the tax reductions, the fact is that for the great majority of ordinary theatregoers the increase in VAT across the board, the impact of inflation and the rise in the cost of living will leave less in people's pockets for expenditure on such inessentials as theatregoing.
Then the effects of the Government's cuts on the Arts Council—bad this year and worse next year. The Arts Council's ability to support the range of its responsibilities with inflation rampant is bound to be curtailed. And then the local authtorities—their reaction to public expenditure cuts. Sadly, the track record of most local authorities, particularly Conservative authorities, is poor in regard to the arts. The first budgets that they are likely to trim are those which fund arts activities. So the prospects for live theatre are pretty dim.
But the Chancellor of the Exchequer has compounded the damage. Theatre performances and activities already suffered under the earlier impost of the 8 per cent. VAT rate, against the pleas of those like myself and indeed the present arts Minister, the Chancellor of the Duchy of Lancaster, who had all wanted a zero rating in VAT for those activities and related activities such as musical performances in the concert hall and opera house. But the Chancellor of the Exchequer upped the rate to have a standard rate of 15 per cent. Even he must have known the damage that that would do to the practitioners, the practice and the performance of the arts. The Chancellor of the Duchy of Lancaster certainly knew,


because he cares about the arts—or so he claimed in the old days.
The life of the live theatre is made much more difficult to sustain and more costly to finance by these developments. The costs of materials of production, the printing of programmes, the maintenance of the theatres—backstage and in the auditorium, the making of costumes, wigs and scenery, every single cost of keeping theatres open and in active operation, will be upped and upped damagingly by the 15 per cent. imposition of VAT. That cannot fail to damage disastrously a creative industry which lives pared to the bone and which has done so for years. It survives not on careful commercial calculation but more by faith and hope, with very little charity. It has survived in that state for many years.
The box office receipts which help to float all these creative activities are bound to be affected by the increase in VAT to 15 per cent. in seat pricing, because fewer people will be able to go as regularly as they would have liked to go and, perhaps, as they used to do when VAT was lower. The theatre is an industry beset in any case by the uncertainties of passing taste and fashion, by the uncertainty of audience reaction, and the fallibilities of writer and director and performer.
Everything is not perfect in the theatre world. It has its own internal problems. It really is a risk enterprise. [Interruption.] If the hon. Member for Grantham (Mr. Hogg) does not come into the Chamber or cease his chattering, I shall go and belt him one.

Mr. Deputy Speaker: Order. The hon. Member for Grantham (Mr. Hogg) must come into the Chamber if he wishes to intervene.

Mr. Faulds: Perhaps the hon. Member is itching to make a valuable contribution, since he obviously knows a great deal about these matters.

Mr. D. N. Campbell-Savours: He is certainly itching.

Mr. Faulds: Yes, he is.

Mr. Wickenden: Despite the hon. Gentleman's invective, it is clear that he did not understand the point that I was trying to make. Will he explain in simple

language—we are simple, albeit Philistine, people on the Conservative Benches—why it is that according to the hon. Gentleman "The Festival of Erotica" should have tax concessions and exemption from VAT when a long-playing record of a marvellous symphony should not? Why is it that the undressed cavortings of "Oh! Calcutta!" should be exempt from VAT but a film of Hamlet should not?

Mr. Faulds: I think the hon. Gentleman is, unconsciously perhaps, making more revelations about himself than he ought to make. It is interesting. Perhaps we should pursue the matter in private in the bar on another night. However, in answer to his question, the reason why we argue for VAT exemption or lowering of VAT on the theatre is the point I made earlier, and which I think the Minister of State got if the hon. Member did not.
The life of the theatre is in danger, and if, to save it, we have to fund obscene performances on occasions, such as parts of "Oh! Calcutta!" or fund erotic performances in dance, so what? The hon. Gentleman does not have to attend. He can stay away and be worried about it. It might, incidentally, require the support of performances that a lot of us would not be interested in seeing. The hon. Member is very eager to watch them, apparently. It might incidentally have that effect. But it would save the life of the theatre. That is what the amendment is about.
I was talking about the life of the theatre. It really is a risk enterprise. But is any allowance made for that? Far from it. Generally losses can be set against income tax and corporation tax—as Conservative Members undoubtedly know. But in the framework of the theatre, VAT has to be paid even on losses. One wonders sometimes how the poor thing survives.

Mr. Peter Rees: I wonder whether the hon. Gentleman appreciates that a registered theatre can, of course, set its VAT inputs against its outputs.

Mr. Faulds: I have much too much sense to enter into a detailed financial argument with the hon. and learned Gentleman, but I think that he would agree that VAT losses are not claimable. If the hon. and learned Gentleman seeks to enlighten me on that, perhaps we


could have a private chat later. I notice that he does not take up my argument.
The hon. and learned Gentleman is known for his pro-Europeanism. He is a Minister in a Government which, in my view quite rightly, staunchly supports our European involvement. How does our provision of moneys in direct grant aid to the live theatre, including opera and ballet, compare with that of other European countries per head of population per year? Here I should like to read a short table of figures, because although my hon. Friend the Member for Norwich, South (Mr. Garrett) touched on this matter, the range of figures is very revealing and should be put on record.
The West German figure, per head of population, is £7·80 a year. For Sweden the figure is £6; Switzerland, £2; Italy, £1; Belgium, 90p; France, 60p; Netherlands, 60p. For Great Britain, at the bottom of the list, the figure is 45p. That is a deplorably low figure for a country which claims as we do, with some justification, to be a cultured community It is extraordinary for a country that makes a contribution to the arts in all fields—poetry, writing, painting, sculpture, music, theatre and ballet—that bears comparison with the rest of the world. We are the best practitioners of the arts in every form throughout the world. That is not an idle chauvenistic boast. But think, Mr. Deputy Speaker, how incomparably richer our artistic life could be in Britain were we to fund such creativity to the extent practised in West Germany and Sweden.
And then, Sir, perhaps in more direct relevance to the amendment, which permits my argument, I should like to compare the VAT rates imposed on theatre and related activities, such as concerts, in the EEC countries. In France, the standard rate of VAT is 17·6 per cent., with a special rate for the theatre of 7 per cent. In West Germany, where the standard rate is 12 per cent., the live theatre is totally exempt. In Italy, the standard rate is 14 per cent. and the rate for the theatre is 6 per cent. In Belgium, the

figures are 16 per cent. and 6 per cent.; in Ireland, 20 per cent. and 10 per cent.; and in Luxembourg, 10 per cent. and 5 per cent. Only the Netherlands and Denmark impose the standard rate of VAT on the life of the theatre. Neither of those countries has stirred the pulses of the world with its theatrical contributions.

Will the Government not look at this problem again? If their concern for the life of the theatre in Britain is not profound enough for the introduction of zero rating, for which some hon. Members, including the arts Minister, used to argue, will they not, even now, consider a lower rate in line with EEC practice? 10 per cent., a return to 8 per cent., or—an even happier slip to only 5 per cent. Such an act would not be a gesture of charitable inclination and responsible concern but might literally make all the difference between life and death for certain parts of the live theatre. That is a point that some hon. Members seem unable to grasp.

One of the problems of politics is that those politicians whose policies achieve actual damage are often in another Department, are out to grass in another place, sit on the board of a bank—we can all think of a few names—or are perhaps called to eternal service before the damage that they have done becomes apparent. I cannot think that the hon. and learned Gentleman or his right hon. Friend, and my friend, the Chancellor of the Duchy of Lancaster would wish to be included in that ignoble band. I really do urge the hon. and learned Gentleman to consider the amendment with due concern and for once, to use a favourite phrase of the Chancellor of the Duchy of Lancaster for once on an ecumenical occasion, to accept it. I must advise my hon. Friends that I shall not withdraw the amendment and that I count on their support in the Lobby.

Question put, That the amendment be made:—

The House divided: Ayes 202, Noes 259.

Division No. 66]
AYES
[8.43 p.m.


Adams, Allen
Barnett, Guy (Greenwich)
Bradley, Tom


Alton, David
Barnett, Rt Hon Joel (Heywood)
Bray, Dr Jeremy


Anderson, Donald
Beith, A. J.
Brown, Hugh D. (Provan)


Archer, Rt Hon Peter
Benn, Rt Hon Anthony Wedgwood
Brown, Robert C. (Newcastle W)


Armstrong, Ernest
Bennett, Andrew (Stockport N)
Buchan, Norman


Ashley, Jack
Bidwell, Sydney
Callaghan, Rt Hon J. (Cardiff SE)


Ashton, Joe
Booth, Rt Hon Albert
Callaghan, Jim (Middleton &amp; P)


Atkinson, Norman (H'gey, Tott'ham)
Bottomley, Rt Hon Arthur (M'brough)
Campbell, Ian




Campbell-Savours, Dale
Horam, John
Pendry, Tom


Canavan, Dennis
Howell, Rt Hon Denis (B'ham, Sm H)
Penhaligon, David


Carmichael, Neil
Howells, Geraint
Powell, Raymond (Ogmore)


Cartwright, John
Hughes, Mark (Durham)
Prescott, John


Clark, Dr David (South Shields)
Hughes, Robert (Aberdeen North)
Radice, Giles


Cocks, Rt Hon Michael (Bristol S)
Jay, Rt Hon Douglas
Rees, Rt Hon Merlyn (Leeds South)


Cohen, Stanley
John, Brynmor
Richardson, Miss Jo


Coleman, Donald
Johnson, James (Hull West)
Roberts, Ernest (Hackney North)


Concannon, Rt Hon J. D.
Jones, Alec (Rhondda)
Roberts, Gwilym (Cannock)


Cook, Robin F.
Jones, Barry (East Flint)
Robinson, Geoffrey (Coventry NW)


Cowans, Harry
Jones, Dan (Burnley)
Rodgers, Rt Hon William


Craigen, J. M. (Glasgow, Maryhill)
Kaufman, Rt Hon Gerald
Rooker, J. W.


Crowther, J.S.
Kilfedder, James, A.
Roper, John


Cunliffe, Lawrence
Kilroy-Silk, Robert
Ross, Ernest (Dundee West)


Dalyell, Tam
Kinnock, Neil
Ross, Stephen (Isle of Wight)


Davies, Rt Hon Denzil (Llanelli)
Lambie, David
Rowlands, Ted


Davies, E. Hudson (Caerphilly)
Lamond, James
Sever, John


Davies, Ifor (Gower)
Leighton, Ronald
Sheerman, Barry


Davis, Clinton (Hackney Central)
Lewis, Arthur (Newham North West)
Sheldon, Rt Hon Robert (A'ton-u-L)


Davis, Terry (B'rm'ham, Stechford)
Lewis, Ron (Carlisle)
Silverman, Julius


Dean, Joseph (Leeds West)
Lyon, Alexander (York)
Skinner, Dennis


Dempsey, James
Lyons, Edward (Bradford West)
Snape, Peter


Dewar, Donald
McDonald, Dr Oonagh
Soley, Clive


Dixon, Donald
McElhone, Frank
Spearing, Nigel



McGuire, Michael (Ince)
Spriggs, Leslie


Dormand, J. D.
McKay, Allen (Penistone)
Steel, Rt Hon David


Dubs, Alfred
MacKenzie, Rt Hon Gregor
Stewart, Rt Hon Donald (W Isles)


Duffy, A.E. P.
Maclennan, Robert
Stoddart, David


Dunn, James A. (Liverpool, Kirkdale)
McMahon, Andrew
Stott, Roger


Dunnett, Jack
McMillan, Tom (Glasgow, Central)
Strang, Gavin


Dunwoody, Mrs Gwyneth
McNally, Thomas
Summerskill, Hon Dr Shirley


Eastham, Ken
McNamara, Kevin
Taylor, Mrs Ann (Bolton West)


Edwards, Robert (Wolv SE)
McWilliam, John
Thomas, Dafydd (Merioneth)


Ellis, Raymond (NE Derbyshire)
Marshall, David (Gl'sgow, Shettles'n)
Thomas, Jeffrey (Abertillery)


Ellis, Tom (Wrexham)
Marshall, Dr Edmund (Goole)
Thomas, Mike (Newcastle East)


Ennals, Rt Hon David
Marshall, Jim (Leicester South)
Thorne, Stan (Preston South)


Evans, Ioan (Aberdare)
Martin, Michael (Gl'gow, Springb'rn)
Tilley, John


Evans, John (Newton)
Mason, Rt Hon Roy
Varley, Rt Hon Eric G.


Faulds, Andrew
Maynard, Miss Joan
Wainwright, Richard (Colne Valley)


Field, Frank
Mikardo, Ian
Watkins, David


Fletcher, Ted (Darlington)
Millan, Rt Hon Bruce
Weetch, Ken


Foot, Rt Hon Michael
Miller, Dr M. S. (East Kiibride)
Wellbeloved, James


Ford, Ben
Mitchell, Austin (Grimsby)
Welsh, Michael


Forrester, John
Mitchell, R. C. (Soton, Itchen)
White, Frank R. (Bury &amp; Radcliffe)


Foster, Derek
Morris, Rt Hon Alfred (Wythenshawe)
White, James (Glasgow, Pollok)


Foulkes, George
Morris, Rt Hon Charles (Openshaw)
Whitehead, Phillip


Freeson, Rt Hon Reginald
Morris, Rt Hon John (Aberavon)
Willey, Rt Hon Frederick


Garrett, John (Norwich S)
Morton, George
Williams, Sir Thomas (Warrington)


Ginsburg, David
Moyle, Rt Hon Roland
Wilson, Gordon (Dundee East)


Gourlay, Harry
Mulley, Rt Hon Frederick
Wilson, Rt Hon Sir Harold (Huyton)


Hamilton, James (Bothwell)
Newens, Stanley
Wilson, William (Coventry SE)


Hamilton, W. W. (Central Fife)
Oakes, Gordon
Winnick, David


Hardy, Peter
Ogden, Eric
Woodall, Alec


Harrison, Rt Hon Walter
O'Halloran, Michael
Woolmer, Kenneth


Hattersley, Rt Hon Roy
O'Neill, Martin
Wrigglesworth, Ian


Haynes, David
Orme, Rt Hon Stanley
Wright, Miss Sheila


Heffer, Eric S.
Palmer, Arthur
Young, David (Bolton East)


Hogg, Norman (E Dunbartonshire)
Park, George



Home Robertson, John
Parker, John
TELLERS FOR THE AYES:


Homewood, William
Parry, Robert
Mr. Ted Graham and


Hooley, Frank

Mr. Hugh Mc Cartney.




NOES


Adley, Robert
Biggs-Davison, John
Carlisle, Kenneth (Lincoln)


Aitken, Jonathan
Blackburn, John
Carlisle, Rt Hon Mark (Runcorn)


Alexander, Richard
Body, Richard
Channon, Paul


Alison, Michael
Bonsor, Sir Nicholas
Chapman, Sydney


Ancram, Michael
Boscawen, Hon Robert
Churchill, W.S.


Arnold, Tom
Bowden, Andrew
Clark, Hon Alan (Plymouth, Sutton)


Aspinwall, Jack
Braine, Sir Bernard
Clarke, Kenneth (Rushcliffe)


Atkins, Robert (Preston North)
Bright, Graham
Cockeram, Eric


Atkinson, David (B'mouth, East)
Brinton, Timothy
Colvin, Michael


Baker, Kenneth (St. Marylebone)
Brocklebank-Fowler, Christopher
Cope, John


Banks, Robert
Brotherton, Michael
Cormack, Patrick


Beaumont-Dark, Anthony
Brown, Michael (Brigg &amp; Sc'thorpe)
Corrie, John


Bell, Ronald
Browne, John (Winchester)
Costain, A. P.


Bendall, Vivian
Bruce-Gardyne, John
Cranborne, Viscount


Bennett, Sir Frederic (Torbay)
Bryan, Sir Paul
Critchley, Julian


Benyon, Thomas (Abingdon)
Buchanan-Smith, Hon Alick
Crouch, David


Benyon, W. (Buckingham)
Budgen, Nick
Dean, Paul (North Somerset)


Berry, Hon Anthony
Bulmer, Esmond
Dickens, Geoffrey


Best, Keith
Burden, F. A.
Dodsworth, Geoffrey


Bevan, David Gilroy
Butcher, John
Dorrell, Stephen


Biffen, Rt Hon John
Cadbury, Jocelyn
Dover, Denshore




Dunn, Robert (Dartford)
Latham, Michael
Rhodes James, Robert


Durant, Tony
Lawrence, Ivan
Ridsdale, Julian


Dykes, Hugh
Lawson, Nigel
Rifkind, Malcolm


Eden, Rt Hon Sir John
Lee, John
Roberts, Michael (Cardiff NW)


Eggar, Timothy
Le Marchant, Spencer
Roberts, Wyn (Conway)


Elliott, Sir William
Lennox-Boyd, Hon Mark
Rossi, Hugh


Emery, Peter
Lester, Jim (Beeston)
Rost, Peter


Fairbairn, Nicholas
Lewis, Kenneth (Rutland)
Royle, Sir Anthony


Fairgrieve, Russell
Lloyd, Ian (Havant &amp; Waterloo)
Sainsbury, Hon Timothy


Faith, Mrs Sheila
Lloyd, Peter (Fareham)
Scott, Nicholas


Farr, John
Loveridge, John
Shaw, Michael (Scarborough)


Fell Anthony
Luce, Richard
Shelton, William (Streatham)


Fenner Mrs Peggy
Lyell, Nicholas
Shepherd, Colin (Hereford)


Finsberg, Geoffrey
McAdden, Sir Stephen
Shepherd, Richard (Aldridge-Br'hills)


Fisher, Sir Nigel
McCrindle, Robert
Shersby, Michael


Fletcher, Alexander (Edinburgh N)
Macfarlane, Neil
Silvester, Fred


Fookes, Miss Janet
MacGregor, John
Sims, Roger


Forman Nigel
Mackay, John (Argyll)
Skeet, T. H. H.


Fowler, Rt Hon Norman
McKelvey, William
Smith, Dudley (War. and Leam'ton)


Fox, Marcus
McNair-Wilson, Patrick (New Forest)
Speed, Keith


Fraser, Rt Hon H. (Stafford &amp; St)
Madel, David
Speller, Tony


Fraser, Peter (South Angus)
Major, John
Spicer, Michael (S Worcestershire)


Fry, Peter
Marland, Paul
Sproat, Iain


Gardiner, George (Reigate)
Marlow, Antony
Squire, Robin


Gardner, Edward (South Fylde)
Marten, Neil (Banbury)
Stanbrook, Ivor


Garel-Jones, Tristan
Mates, Michael
Steen, Anthony


Glyn, Dr Alan 
Mather, Carol
Stewart, John (East Renfrewshire)


Goodhart, Philip
Maude, Rt Hon Angus
Stokes, John


Goodhew, Victor 
Mawby, Ray
Stradling Thomas, J



Mawhinney, Dr Brian
Tapsell, Peter


Goodlad, Alastair
Maxwell-Hyslop, Robin
Temple-Morris, Peter


Gorst, John
Mellor, David
Thatcher, Rt Hon Mrs Margaret


Gow, Ian
Meyer, Sir Anthony
Thomas, Rt Hon Peter (Hendon S)


Gower, Sir Raymond
Miller, Hal (Bromsgrove &amp; Redditch)
Thompson, Donald


Greenway, Harry
Mills, Iain (Meriden)
Thorne, Neil (Ilford South)


Griffiths, Peter (Portsmouth N)
Miscampbell, Norman
Thornton, George


Grist, Ian
Moate, Roger
Townend, John (Bridlington)


Gummer, John Selwyn
Moore, John
Townsend, Cyril D. (Bexleyhealth)


Hamilton, Michael (Salisbury)




Hampson, Dr. Keith
Morgan, Geraint
Trippier, David



Morris, Michael (Northampton, Sth)
Trotter, Neville


Hannam, John
Morrison, Hon Charles (Devizes)
van Straubenzee, W. R.


Haselhurst, Alan
Morrison, Hon Peter (City of Chester)
Viggers, Peter


Hastings, Stephen
Murphy, Christopher
Waddington, David


Havers, Rt Hon Sir Michael
Myles, David
Wakeham, John


Hawkins, Paul
Neale, Gerrard
Waldegrave, Hon William


Hawksley, Warren
Neubert, Michael
Walker-Smith, Rt Hon Sir Derek


Heath, Rt Hon Edward
Newton, Tony
Wall, Patrick


Heddle, John
Nott, Rt Hon John
Walters, Dennis


Henderson, Barry
Onslow, Cranle[...]
Ward, John


Heseltine, Rt Hon Michael
Oppenheim, Rt Hon Mrs Sally
Warren, Kenneth


Hicks, Robert
Osborn, John
Watson, John


Hill, James
Page, John (Harrow, West)
Wells, John (Maidstone)


Hogg, Hon Douglas (Grantham)
Page, Rt Hon R. Graham (Crosby)
Wells, P. Bowen (Hert'rd&amp;Stev'nage)


Hooson, Tom
Parris, Matthew
Wheeler, John


Howell, Rt Hon David (Guildford)
Patten, Christopher (Bath)
Whitelaw, Rt Hon William


Howell, Ralph (North Norfolk)
Pawsey, James
Whitney, Raymond


Hunt, David (Wirral)
Percival, Sir Ian
Wickenden, Keith


Hunt, John (Ravensbourne)
Pink, R. Bonner
Wiggin, Jerry


Irving, Charles (Cheltenham)
Pollock, Alexander
Wilkinson, John


Jessel, Toby
Porter, George
Williams, Delwyn (Montgomery)


Jopling, Rt Hon Michael
Price, David (Eastleigh)
Wolfson, Mark


Kaberry, Sir Donald
Proctor, K. Harvey
Young, Sir George (Acton)


Kershaw, Anthony
Raison, Timothy
Younger, Rt Hon George


King, Rt Hon Tom
Rathbone, Tim



Knight, Mrs Jill
Rees, Peter (Dover and Deal)
TELLERS FOR THE NOES:


Knox, David
Rees-Davies, W. R.
Lord James Douglas-Hamilton and


Lang, Ian
Renton, Tim
Mr. Peter Brooke.


Langford-Holt, Sir John

Question accordingly negatived.

Miss Jo Richardson: I beg to move amendment No. 4, in page 2, line 32, at end insert:
'(6) As from the passing of this Act subsection (1) above shall not apply to the supply of female sanitary goods.'.
I first encountered this subject and the cost of it when I was about 13, and I had a direct personal interest in it continually until a few years ago when that interest ceased. The cost of sanitary goods

has long been a source of resentment to women since it is one from which no woman can escape.
From time to time there have been moves in the House to deal with this matter. There have been attempts to get the cost reduced—not just the VAT element of it—and to have sanitary products regarded as essential items which are regularly used by women just as medicaments or appliances are used by people who have a medical ailment. I am pleased


to say that the latter group get their requirements on prescription. Women are not able to get sanitary products on prescription, although over the years many of them have pressed for that to happen.
This matter is of interest to me as a woman but also as a Member of Parliament. In a family with a wife and daughters the burden falls upon the breadwinner. Therefore, right hon. and hon. Gentlemen ought to take as much interest in this matter as right hon. and hon. Ladies, and to that end it is worth pointing out that the first three names attached to the amendment belong to male hon. Members.
All hon. Members ought to take an interest in the subject anyway because it affects their female constituents. It is a subject upon which I have had direct approaches from women constituents who are concerned about it.
I was unhappy when VAT was applied to sanitary products in the first place, but the rate was only 8 per cent. For it now to be increased to 15 per cent. is a bit too much. I should have preferred to move an amendment to zero rate these products, but I am not allowed to argue along those lines. There is a good case for them to be zero rated, but perhaps we may pursue that argument on another occasion. The average pack of 10 standard sanitary towels costs 37p. That includes the 15 per cent. VAT. The average cost of tampons is 27p inclusive of 15 per cent. VAT. The more absorbent products cost more. Most women will use one packet per month and therefore that cost is a regular expense. There is no escape from that.
9 p.m.
Sanitary protection is not a luxury and a woman cannot say that she will do without it for a month and find another way of coping. The problem must be faced. It particularly affects poorer families, especially large families with several daughters.
My hon. Friends and I have tried to show that the effect of VAT—and our amendments are designed to this effect—affects the less-well-off sections of the community who are less able to bear the increased VAT, particularly on essential products.
A long time ago I had representations from the female work force of a factory in my constituency. They took the trouble to petition me about the cost of sanitary products. Their petition was not concerned specifically with VAT, but that is a real element of the expense. When I next meet those women, they will be even angrier because the 15 per cent. VAT has increased the cost of those products.
The Price Commission has examined the cost of sanitary products on three occasions. In May 1978 it drew attention in its recommendations to the fact that the price reflected the high cost of advertising and promotion. The Price Commission considered that the advertising and promotional costs should be reduced and that the benefits so derived should be passed on to the consumer. That would be most welcome to my female constituents and no doubt to all women. The advice of the Price Commission will, of course, have been ignored. The Government are doubly culpable in their abandonment of the Price Commission and in the raising of the VAT element in the cost of sanitary products from 8 per cent. to 15 per cent.
I recognise that this is a personal and sensitive subject but I urge the Government to recognise that it is a topic which concerns at least half the population. I ask the Government seriously to think about reducing the VAT on those products to 8 per cent. and, on a later occasion, to reconsider the whole question whether those products should be zero rated.

Mr. Robert Kilroy-Silk: I support the amendment. All hon. Members will agree that the argument is overwhelming and I do not imagine that the Minister of State can reject the amendment. As my hon. Friend the Member for Barking (Miss Richardson) said, sanitary products cannot be described as a luxury or an irrelevance—they are absolutely essential. Large families find these products expensive, and there are many large families in my constituency, as I know there are in the constituency of my hon. Friend the Member for Barking. These products are expensive when they are considered in terms of the acknowledged fact—this will be known to many hon. Members on both sides of the House from their own experience—that young


girls now menstruate at a very much earlier age. Poorer families and large families have a considerable burden imposed upon their financial wherewithal which should not be imposed.
No doubt the Minister of State will respond by saying that the amendment, if accepted, would create an anomaly. He will argue that if value added tax for these products is reduced to 8 per cent. or, as my hon. Friends and I wish, abolished altogether, it will create an anomaly. I do not understand where the anomaly would lie.
No doubt the Financial Secretary will bring out the hoary argument that if we exempt female sanitary products, or if we reduce the rate to 8 per cent., it will be necessary to do the same for men's shaving equipment. That was the argument used by my right hon, and hon. Friends when the Labour Government were in office. That is not good enough. It is an argument that carries no weight. It is an argument that is unacceptable to almost everyone in the Chamber.
The products that we are talking about are essential. They are medical products. It is recognised that they are expensive. They are necessary now for a larger proportion of the female population than a decade or more ago. There cannot be any defensible argument to be sustained in opposition to the amendment. There is no argument in terms of the raising of revenue, and certainly not on any moral grounds.
I know that the Minister of State finds this subject sensitive. I appreciate that he finds it embarrassing. I know that many of my hon. Friends do too. However, there is no reason why we should be embarrassed. As my hon. Friend the Member for Barking said, we should not be ashamed, embarrassed or sensitive. It is an extremely important issue. However, if the hon. and learned Gentleman finds it embarrassing or sensitive, he should remove the issue from controversy and discussion in this Chamber. He can do that by making a start tonight by reducing value added tax to 8 per cent. Next year he can introduce an amendment to exempt female sanitary products from value added tax. I promise him that if he does that neither I nor any of my hon. Friends will make a speech on that occasion.

Mr. Peter Rees: The hon. Member for Barking (Miss Richardson) has argued her case moderately and factually. Tonight we have heard the hon. Member for Ormskirk (Mr. Kilroy-Silk) at his most appealing. I feel almost guilty of a gross indecency in suggesting to the House that there is possibly a different point of view. This is for me—I think for many of my hon. Friends and perhaps for Labour Members, even though the hon. Member for Ormskirk approaches the problem more robustly than I do—a sensitive issue.
I can assure the House that it is an issue on which the Government have thought long and hard. We realise that it affects the feminine section of our populace. I have no doubt that it is a problem on which the previous Administration thought long and hard. I have no doubt that the considerations that led them to resist the argument have weighed with us.
I recognise the force of all the arguments that have been advanced. However, VAT is not a tax to be levied only on luxuries. There are, dare I say it, a whole range of necessities that I shall call hygienic necessities that attract the full rate of value added tax. I shall give the House some examples—soap, tissues and medicines not on prescription. I speak with particular diffidence, but perhaps one is entitled to make a masculine contribution—it may appeal to the hon. Member for Bolsover (Mr. Skinner). I include razor blades in my list of examples. I know that the hon. Member for Ormskirk was rather dismissive of that argument. The list also includes bandages, plasters and disinfectants. We can all argue the qualitative importance of all those items. My general argument, which I hope I am advancing moderately, is that VAT is charged at the standard rate on a range of hygienic necessities.

Mr. Cook: Surely the hon. and learned Gentleman appreciates that it is not essential to purchase razor blades. He is producing an answer that we have heard before on many occasions. It is argued that there are other goods that might, similarly, be the subject of a reduced rate of VAT or removed from VAT altogether. That does not enable hon. Members to reply adequately to their constituents who have raised this


issue. In addressing himself to the amendment, will the Minister explain why this product is suitable to be taxed and to be a revenue-raising source for the Exchequer? That is the question to which we should address ourselves—not how many other products are unsuitable for this purpose.

Mr. Peter Rees: By his very appearance in this Chamber the hon. Gentleman undermines, to a limited degree, the example of razor blades that I gave. He is a skilful debater. He turned the problem round the wrong way. He suggested that I must justify VAT on a particular product. I suggest that as VAT is designed to be a broadly based tax on goods and services, it is for those who wish to make an exception to persuade the House of the validity of that exception.
There are always two sides to any question. I am attempting to put forward, however inadequately, the case against acceding to the hon. Lady's suggestion. This is the fundamental question. I am sure that the case appealed to the previous Administration as the same arguments were addressed to them. However, they found it in their hearts or minds to resist them. The problem of the same considerations has also weighed with us. Value added tax is not essentially confined to luxuries. It is a broadly based tax on goods and services. Therefore, we must establish some kind of principle. The one I look for is this: why should hygienic necessities be exempt? The hon. Lady will follow the logic of my argument. If I take her case a little further, why should not soap and the other items that I enumerated also be subject to VAT at a lower rate or be zero rated? With diffidence, I suggest that that would undermine the basis of the tax.

Mr. Kilroy-Silk: Surely the Minister is not saying that all the items he mentioned come into the same category and have the same importance as the product we are talking about tonight. That is not the case. He knows that. He has not got his heart in arguing that. He is not trying to suggest that if we exempt this product from VAT we shall have a horde of constituents round our necks pleading for the same treatment for soap and dis-

infectant. Of course, we shall not. They recognise—as does the Minister—that this product falls into a totally different category and justifies an anomaly, if the Minister gives way to the amendment.

Mr. Rees: The hon. Gentleman is at his most eloquent tonight. I have heard him speak on a range of subjects, but I never heard him debate a point more effectively. Obviously, his heart is in this matter. It makes my task especially difficult, as the right hon. Member for Llanelli (Mr. Davies) found when he had to harden his heart against comparable arguments.
The hon. Gentleman suggests that we should make a series of qualitative judgments. It is difficult to find any objective test in this area. At the end of the day it is a matter of subjective judgment. Therefore I hope that the House will not regard me as guilty of male chauvinism—I may be guilty of fiscal chauvinism—on this occasion if I suggest on general principles, however much we may recognise the sensitivity of the issues and the eloquence and force with which the hon. Lady made her point, that the House should—

Mr. Stephen Ross: rose—

Mr. Rees: I shall not give way. I am coming to the end of my speech. It was open to the hon. Gentleman to intervene at an earlier stage. I do not think that it would assist if I gave way now.

Mr. Stephen Ross: The Minister says that he cannot give way now. The reason is that he wants one standard rate of VAT. Will he at least say from the Dispatch Box that he is prepared to reconsider the point for the next financial year? The points made were pressing and obvious. This is a tax on women; it does not apply to men. Surely the Treasury should accept this case.

Mr. Rees: The hon. Gentleman suggests that the principles will alter, but they will not. The principles will remain the same, just as I dare say they remained the same for the previous Administration. With considerable reluctance—because I recognise all the points which have been put—I must invite the House to reject the amendment.

9.15 p.m.

Mr. John Garrett: The official Opposition support this sensible amendment. What a change there has been, Mr. Deputy Speaker, in the Minister of State. When he is leaping about from crag to crag in high finance, arguing for tax relief for the wealthy, he is full of himself. When he is dealing with a problem which affects ordinary working-class people, he is very modest but as hard-nosed as ever, and refuses to see the force of our argument.
This shows once again the folly of having a 15 per cent. flat rate of VAT with absolutely no exceptions. We have shown in other debates on the Bill that VAT falls on goods which are essential and that the effect of raising it across the board in this way hits poor families hardest. Many of them get nothing out of the tax reliefs, the goodies handed out at the beginning of the Bill. Consider a family on below-average earnings, such as many of us have in our constituencies, with two or three teenage daughters. The cost of VAT on santitary protection alone will be a significant burden.
My hon. Friend the Member for Barking (Miss Richardson) put the case very sensitively and intelligently. My hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) developed it. The Minister of State produced a load of spurious comparisons which showed that he had very little understanding of the burden of the charges on these goods for ordinary people. I hope that my hon. Friend the Member for Barking will press the amendment to a Division.

Miss Richardson: I was very disappointed with the reply of the Minister of State. I was particularly disappointed that he did not respond more sympathetically to the suggestion of the hon. Member for Isle of Wight (Mr. Ross) that he might consider this matter for next year. That would at least have been some response.

But no, the hon. and learned Gentleman chose, as usual, to be hardhearted.

I would be quite happy—as, I am sure, would other hon. Members and people in the country—if the Government regarded hygienic products as being free of VAT, because they are essential items in anyone's budget. But the item with which the amendment is concerned has a very special significance, because it represents a regular piece of spending by every woman and by every family, and also because it is discriminatory. There is so much in the Bill that is discriminatory, and still remains discriminatory, against women. I should have thought that on this relatively small amendment, which would help so many people, the hon. and learned Gentleman could give way.

Mr. Barry Porter: I am not entirely unconvinced by the arguments advanced by Opposition Members, and I wonder whether, in view of the thrust of the argument, my hon. and learned Friend might consider the proposal for next year, if it cannot be considered now. If he said that, it might help one or two waverers on the Conservative Benches.

Miss Richardson: I always feel very warmly towards Conservative Members who listen carefully to arguments and who are prepared to be convinced by them. Perhaps the intervention of the hon. Member for Bebington and Ellesmere Port (Mr. Porter) will make the Treasury think more carefully next year about this very sensitive subject. But I will press the amendment to a Division because I believe that that is what the female constituents whom we represent would want us to do.

Question put, That the amendment be made:

The House divided: Ayes 206, Noes 263.

Division No. 67]
AYES
[9.20 p.m.


Adams, Allen
Bennett, Andrew (Stockport N)
Campbell, Ian


Alton, David
Bidwell, Sydney
Campbell-Savours, Dale


Anderson, Donald
Booth, Rt Hon Albert
Canavan, Dennis


Archer, Rt Hon Peter
Bottomley, Rt Hon Arthur (M'brough)
Carmichael, Neil


Armstrong, Ernest
Bradley, Tom
Cartwright, John


Ashley, Jack
Bray, Dr Jeremy
Clark, Dr David (South Shields)


Ashton, Joe
Brown, Hugh D. (Provan)
Cocks, Rt Hon Michael (Bristol S)


Atkinson, Norman (H'gey, Tott'ham)
Brown, Robert C. (Newcastle W)
Cohen, Stanley


Barnett, Guy (Greenwich)
Brown, Ron (Edinburgh, Leith)
Coleman, Donald


Barnett, Rt Hon Joel (Heywood)
Buchan, Norman
Concannon, Rt Hon J. D.


Beith, A. J.
Callaghan, Rt Hon J. (Cardiff SE)
Cook, Robin F.


Benn, Rt Hon Anthony Wedgwood
Callaghan, Jim (Middleton &amp; P)
Cowans, Harry




Craigen, J. M. (Glasgow, Maryhill)
Jones, Barry (East Flint)
Rees, Rt Hon Merlyn (Leeds South)


Crowther, J. S.
Jones, Dan (Burnley)
Richardson, Miss Jo


Cunliffe, Lawrence
Kaufman, Rt Hon Gerald
Roberts, Ernest (Hackney North)


Dalyell, Tam
Kilfedder, James A.
Roberts, Gwilym (Cannock)


Davies, Rt Hon Denzil (Llanelli)
Kilroy-Silk, Robert
Robinson, Geoffrey (Coventry NW)


Davies, E. Hudson (Caerphilly)
Kinnock, Neil
Rodgers, Rt Hon William


Davies, Ifor (Gower)
Lambie, David
Rooker, J. W.


Davis, Clinton (Hackney Central)
Lamond, James
Roper, John


Davis, Terry (B'rm'ham, Stechford)
Leadbitter, Ted
Ross, Ernest (Dundee West)


Dean, Joseph (Leeds West)
Leighton, Ronald
Ross, Stephen (Isle of Wight)


Dempsey, James
Lewis, Arthur (Newham North West)
Rowlands, Ted


Dewar, Donald
Lewis, Ron (Carlisle)
Sever, John


Dixon, Donald
Lyon, Alexander (York)
Sheerman, Barry


Dormand, J. D.
Lyons, Edward (Bradford West)
Sheldon, Rt Hon Robert (A'ton-u [...])


Dubs, Alfred
McCartney, Hugh
Silverman, Julius


Duffy, A.E. P.
McDonald, Dr Oonagh
Skinner, Dennis


Dunn, James A. (Liverpool, Kirkdale)
McElhone, Frank
Snape, Peter


Dunnett, Jack
McGuire, Michael (Ince)
Soley, Clive


Dunwoody, Mrs Gwyneth
McKay, Allen (Penistone)
Spearing, Nigel


Eastham, Ken
MacKenzie, Rt Hon Gregor
Spriggs, Leslie


Edwards, Robert (Wolv SE)
Maclennan, Robert
Steel, Rt Hon David


Ellis, Raymond (NE Derbyshire)
McMahon, Andrew
Stewart, Rt Hon Donald (W Isles)


Ellis, Tom (Wrexham)
McMillan, Tom (Glasgow, Central)
Stoddart, David


Ennals, Rt Hon David
McNally, Thomas
Stott, Roger


Evans, Ioan (Aberdare)
McNamara, Kevin
Strang, Gavin


Evans, John (Newton)
McWilliam, John
Summerskill, Hon Dr Shirley


Faulds, Andrew
Marshall, David (Gl'sgow, Shettles'n)
Taylor, Mrs Ann (Bolton West)


Field, Frank
Marshall, Dr Edmund (Goole)
Thomas, Dafydd (Merioneth)


Fletcher, Ted (Darlington)
Marshall, Jim (Leicester South)
Thomas, Jeffrey (Abertillery)


Foot, Rt Hon Michael
Martin, Michael (Gl'gow, Springb'rn)
Thomas, Mike (Newcastle East)


Ford, Ben
Mason, Rt Hon Roy
Thorne, Stan (Preston South)


Forrester, John
Maynard, Miss Joan
Tilley, John


Foster, Derek
Mikardo, Ian
Torney, Tom


Freeson, Rt Hon Reginald
Millan, Rt Hon Bruce
Varley, Rt Hon Eric G.


Garrett, John (Norwich S)
Miller, Dr M. S. (East Kilbride)
Wainwright, Richard (Colne Valley)


Ginsburg, David
Mitchell, Austin (Grimsby)
Watkins, David


Gourlay, Harry
Mitchell, R. C. (Soton, Itchen)
Weetch, Ken


Grant, John (Islington C)
Morris, Rt Hon Alfred (Wythenshawe)
Wellbeloved, James


Hamilton, James (Bothwell)
Morris, Rt Hon Charles (Openshaw)
Welsh, Michael


Hamilton, W. W. (Central Fife)
Morris, Rt Hon John (Aberavon)
White, Frank R. (Bury &amp; Radcliffe)


Hardy, Peter
Morton, George
White, James (Glasgow, Pollok)


Harrison, Rt Hon Walter
Moyle, Rt Hon Roland
Whitehead, Phillip


Hattersley, Rt Hon Roy
Mulley, Rt Hon Frederick
Whitlock, William


Haynes, David
Newens, Stanley
Willey, Rt Hon Frederick


Heffer, Eric S.
Oakes, Gordon
Williams, Sir Thomas (Warrington)


Hogg, Norman (E Dunbartonshire)
Ogden, Eric
Wilson, Gordon (Dundee East)


Home Robertson, John
O'Halloran, Michael
Wilson, Rt Hon Sir Harold (Huyton)


Homewood, William
O'Neill, Martin
Wilson, William (Coventry SE)


Hooley, Frank
Orme, Rt Hon Stanley
Winnick, David


Horam, John
Palmer, Arthur
Woodall, Alec


Howell, Rt Hon Denis (B'ham, Sm H)
Park, George
Woolmer, Kenneth


Howells, Geraint
Parker, John
Wrigglesworth, Ian


Hughes, Mark (Durham)
Parry, Robert
Wright, Miss Sheila


Hughes, Robert (Aberdeen North)
Pendry, Tom
Young, David (Bolton East)


Hughes, Roy (Newport)
Penhaligon, David



John, Brynmor
Powell, Raymond (Ogmore)
TELLERS FOR THE AYES:


Johnson, James (Hull West)
Prescott, John
Mr. Ted Graham and


Jones, Alec (Rhondda)
Radice, Giles
Mr. Thomas Cox.




NOES


Adley, Robert
Body, Richard
Clark, William (Croydon South)


Aitken, Jonathan
Bonsor, Sir Nicholas
Clarke, Kenneth (Rushcliffe)


Alexander, Richard
Boscawen, Hon Robert
Cockeram, Eric


Alison, Michael
Bowden, Andrew
Colvin, Michael


Ancram, Michael
Braine, Sir Bernard
Cope, John


Arnold, Tom
Brinton, Timothy
Cormack, Patrick


Aspinwall, Jack
Brocklebank-Fowler, Christopher
Corrie, John


Atkins, Robert (Preston North)
Brooke, Hon Peter
Costain, A. P.


Atkinson, David (B'mouth, East)
Brotherton, Michael
Cranborne, Viscount


Baker, Kenneth (St. Marylebone)
Brown, Michael (Brigg &amp; Sc'thorpe)
Critchley, Julian


Baker, Nicholas (North Dorset)
Browne, John (Winchester)
Crouch, David


Banks, Robert
Bruce-Gardyne, John
Dean, Paul (North Somerset)


Beaumont-Dark, Anthony
Bryan, Sir Paul
Dickens, Geoffrey


Bell, Ronald
Buchanan-Smith, Hon Alick
Dodsworth, Geoffrey


Bendall, Vivian
Budgen, Nick
Dorrell, Stephen


Bennett, Sir Frederic (Torbay)
Bulmer, Esmond
Dover, Denshore


Benyon, Thomas (Abingdon)
Burden, F. A.
Dunn, Robert (Dartford)


Benyon, W. (Buckingham)
Butcher, John
Durant, Tony


Berry, Hon Anthony
Carlisle, Kenneth (Lincoln)
Dykes, Hugh


Best, Keith
Carlisle, Rt Hon Mark (Runcorn)
Eden, Rt Hon Sir John


Bevan, David Gilroy
Channon, Paul
Eggar, Timothy


Biffen, Rt Hon John
Chapman, Sydney
Elliott, Sir William


Biggs-Davison, John
Churchill, W.S.
Emery, Peter


Blackburn, John
Clark, Hon Alan (Plymouth, Sutton)
Fairbairn, Nicholas







Fairgrieve, Russell
Lester, Jim (Beeston)
Roberts, Wyn (Conway)


Faith Mrs Sheila
Lewis, Kenneth (Rutland)
Rossi, Hugh


Farr, John
Lloyd, Ian (Havant &amp; Waterloo)
Rost, Peter


Fell, Anthony
Lloyd, Peter (Fareham)
Royle, Sir Anthony


Fenner, Mrs Pegg[...]
Loveridge, John
Sainsbury, Hon Timothy


Finsberg, Geoffrey
Luce, Richard
Scott, Nicholas


Fisher, Sir Nigel
Lyell, Nicholas
Shaw, Michael (Scarborough)


Fletcher, Alexander (Edinburgh N)
McAdden, Sir Stephen
Shelton, William (Streatham)


Fookes, Miss Janet
McCrindle, Robert
Shepherd, Colin (Hereford)


Forman, Nigel
Macfarlane, Neil
Shepherd, Richard (Aldridge-Br'hills)


Fowler, Rt Hon Norman
MacGregor, John
Shersby, Michael


Fox, Marcus
Mackay, John (Argyll)
Silvester, Fred


Fraser, Rt Hon H. (Stafford &amp; St)
McKelvey, William
Sims, Roger


Fry, Peter
McNair-Wilson, Patrick (New Forest)
Skeet, T. H. H.


Gardiner, George (Re[...]gate)
Madel, David
Smith, Dudley (War. and Leam'ton)


Gardner, Edward (South Fylde)
Major, John
Speed, Keith


Garel-Jones, Tristan
Marland, Paul
Speller, Tony


Glyn, Dr Alan
Marlow, Antony
Spicer, Michael (S Worcestershire)


Goodhart, Philip
Marten, Neil (Banbury)
Sproat, Iain


Goodhew, Victor
Mates, Michael
Squire, Robin


Goodlad, Alastair
Maude, Rt Hon Angus
Stanbrook, Ivor


Gorst, John
Mawby, Ray
Steen, Anthony


Gow, Ian
Mawhinney, D[...] Brian
Stewart, John (East Renfrewshire)


Gower, Sir Raymond
Maxwell-Hyslop, Robin
Stokes, John


Greenway, Harry
Mellor, David
Stradling Thomas, J.


Griffiths, Peter (Portsmouth N)
Meyer, Sir Anthony
Tapsell, Peter


Grist, Ian
Miller, Hal (Bromsgrove &amp; Redditch)
Tebbit, Norman


Gummer, John Selwyn
Mills, Iain (Meriden)
Temple-Morris, Peter


Hamilton, Michael (Salisbury)
Mills, Peter (West Devon)
Thatcher, Rt Hon Mrs Margaret


Hampson, Dr Keith
Miscampbell, Norman
Thomas, Rt Hon Peter (Hendon S)


Hannam, John
Moate, Roger
Thompson, Donald


Haselhurst, Alan
Moore, John
Thorne, Neil (Ilford South)


Hastings, Stephen
Morgan, Geraint
Thornton, George


Havers, Rt Hon Sir Michael
Morris, Michael (Northampton, Sth)
Townend, John (Bridlington)



Morrison, Hon Charles (Devizes)
Townsend, Cyril D. (Bexleyheath)


Hawkins, Paul
Morrison, Hon Peter (City of Chester)
Trippier, David


Hawksley, Warren
Murphy, Christopher
Trotter, Neville


Heath, Rt Hon Edward
Myles, David
van Straubenzee, W. R.


Heddle, John
Neale, Gerrard
Viggers, Peter


Henderson, Barry
Nelson, Anthony
Waddington, David


Heseltine, Rt Hon Michael
Neubert, Michael
Wakeham, John


Hicks, Robert
Newton, Tony
Waldegrave, Hon William


Hill, James




Hogg, Hon Douglas (Grantham)
Onslow, Cranley
Walker, Rt Hon Peter (Worcester)


Holland, Philip (Carlton)
Oppenheim, Rt Hon Mrs Sally
Walker-Smith, Rt Hon Sir Derek


Hooson, Tom
Osborn, John
Wall, Patrick


Howell, Rt Hon David (Guildford)
Page, John (Harrow, West)
Waller, Gary


Howell, Ralph (North Norfolk)
Page Rt Hon R. Graham (Crosby)
Walters, Dennis


Hunt, David (Wirral)
Parris, Matthew
Ward, John


Hunt, John (Ravensbourne)
Patten, Christopher (Bath)
Warren, Kenneth


Irving, Charles (Cheltenham)
Pawsey, James
Watson, John


Jessel, Toby
Percival, Sir Ian
Wells, John (Maidstone)


Jopling, Rt Hon Michael
Pink, R. Bonner
Wells, P. Bowen (Hert'rd&amp;Stev'nage)


Kaberry, Sir Donald
Pollock, Alexander
Wheeler, John



Porter, George
Whitelaw, Rt Hon William


Kershaw, Anthony
Price, David (Eastleigh)
Whitney, Raymond


King, Rt Hon Tom
Proctor, K. Harvey
Wickenden, Keith


Knight, Mrs Jill
Ralson, Timothy
Wiggin, Jerry


Knox, David
Rathbone, Tim
Wilkinson, John


Lang, Ian




Langford-Holt, Sir John
Rees, Peter (Dover and Deal)
Williams, Delwyn (Montgomery)


Latham, Michael
Rees-Davies, W. R.
Wolfson, Mark


Lawrence, Ivan
Renton, Tim
Young, Sir George (Acton)


Lawson, Nigel
Rhodes James, Robert
Younger, Rt Hon George


Lee, John
Ridsdale, Julian
TELLERS FOR THE NOES:


Le Marchant, Spencer
Rifkind, Malcolm
Mr. Carol Mather and


Lennox-Boyd, Hon Mark
Roberts, Michael (Cardiff NW)
Lord James Douglas-Hamilton.

Question accordingly negatived.

Schedule 3

STOCK RELIEF

9.30 p.m.

Mr. Richard Wainwright: I beg to move amendment No. 5, in page 18, line 16, at end insert:
'(4) In paragraph 2(1) of the said Schedule 5 after "him" there shall be inserted the words "subject to sub-paragraph (2) below" and after paragraph 2(1) of that Schedule there shall be inserted—

(2) There shall be excluded from a charge by way of recovery of relief for any period of account an amount equal to the difference between the relief which could have been claimed under paragraph 1(2) above and the amount of relief specified in a claim under paragraph 1(4) above for the immediately preceding period of account.".'.
The amendment touches the income tax aspect of stock relief. It is of great significance to tens of thousands of self-employed traders, many of whom already have a justified sense of grievance at losing a considerable amount of the stock


relief that on any equitable interpretation should have been written off under the provisions of the Bill—but the Government turned that down at about mid night on Monday 9 July.
It has been pointed out previously that that clumsily constructed form of relief hinges entirely on the value of a trader's stock on only one day of the year. For example, it is easy for a trader through the accidents of trade to finish his trading year with a large stock, perhaps abnormally large, at these times at inflated money values. In the same year, he may well have been unsuccessful and made little or no profit. Under that curious form of relief, such a trader is then confronted with a dilemma. His profit is by no means sufficient to cover his ordinary personal allowances and perhaps the allowances in respect of the capital equipment in his business. On those figures alone he would be foolish to claim anything like the whole of his stock relief because he would get no value from his ordinary income tax allowances. In many cases he is advised to make no claim or, under the Bill, to make only a partial claim.
The mischief arises in the following year when he starts with the colossal disadvantage of an enormous initial stock. Under the perverse system of relief, at the end of the second trading year he may find that because of a lorry-men's strike or other unintended and uncontrolled hold-up in delivery he ends the year with a very low stock. Then comes the most vicious part of the so-called relief. The Revenue claws back from him all the relief in respect of the difference between the large accidental opening stock and the abnormally small closing stock.
Under the clauses of the Bill the trader can make a claim for partial relief. The amendment is designed to cure the astonishing situation which the Government intend to perpetrate that, although a trader can make a partial claim for relief, the clawback in the following year, when his stock situation is reversed, is made in full. This is most inequitable. The trader has had a partial benefit in one year but he is not allowed even a partial clawback the following year. The Revenue's powers of clawback are total.
It is strange and depresssing that this should have arisen under this Government and that the debate tonight should be managed by the Minister of State. In the early days of this strange and illogical relief it was the Minister of State who was one of the most pertinent critics of its shoddy nature. I must remind him of statements that he made on this subject on 21 January 1975. He said:
The Chief Secretary told us that this is a rough and ready clause. The measure of relief that it gives is haphazard in the extreme.
A little later he said:
As has been pointed out, to refer to this as a relief is a misnomer. I do not know whether I would call it a loan. At any rate, for the advantage gained in the present accounting period there will be comparable disadvantages in later accounting periods—[Official Report, 21 January 1975; Vol. 884, c. 1256.]
Given the Minister's perspicacious criticism of this ill-designed, irrational and inequitable relief, it is depressing that he should now pile upon the original irrationality a further irrationality by matching a system for partial stock relief with total clawback powers for the Inland Revenue.
Many sole traders and small business men may find themselves having a claw-back against them far in excess of the partial relief they received the previous year. This is inequitable and it adds to the perversity of the relief.
In a Finance Bill that had to be drawn up in haste this year because of the strange timetable, I did not expect the Government to come forward with a much improved system of inflation accounting for tax. Certainly they will have to do so next year or they will be roasted. However, I did not expect them to add to this monument to folly a further annexe of equal unfairness and irrationality. The Government could redeem themselves and put the matter right if they accepted this simple amendment.

Mr. Peter Rees: Obviously this is self-employment night for the Liberal Party because by the most specious and indirect means the hon. Member for Colne Valley (Mr. Wainwright) has attempted to tie this issue to the self-employed. However, it is true, and a matter of curiosity, that companies are excluded by his amendment. The hon. Gentleman embroidered his speech with a great deal of hyperbole.


However, I am not sure whether he understands the inwardness of his amendment. The amendment appears to be designed so that the unclaimed portion of stock relief could be carried forward to a later year to be set against the recovery charge, but the hon. Gentleman seems to suggest that the recovery charge can somehow exceed the total relief that was claimed. I shall re-examine the matter.

Mr. Richard Wainwright: I have not suggested that the clawback would exceed the relief claimed. I suggested that it could exceed the relief due on the figures of stock over a period of trading. That is different from the relief that is actually claimed.

Mr. Rees: The hon. Gentleman should look again at the matter. The point is that the clawback is to be equated with the relief claimed. It can be related to the fall in stock value or the total relief allowed in past years but it can never exceed the total relief claimed in past years. Therefore, I do not think that the position is as astonishing as the hon. Gentleman affects to have discovered.
I am flattered that he should have recalled my criticisms of our system of stock relief in earlier years. It is always flattering when one's words are quoted back at one and I do not dissent from what I said on that occasion.

Mr. James Lamond: It is disconcerting.

Mr. Rees: It is not in the least disconcerting. The hon. Member for Oldham, East (Mr. Lamond) was obviously not following our debates on that occasion. It may be that he is as confused by the amendment of the hon. Member for Colne Valley as I am.
The system of stock relief was cobbled together in rather a hurry when the previous Administration realised the dent in company liquidity that their tax policies of 1974 had inflicted on the business sector. To that extent, I feel that my criticisms were and still are justified. The previous Administration and ourselves have endeavoured to improve the system in small particulars. However, the hon. Member for Colne Valley is right when he says that we have to look at corporate taxation. When we do so the question of stock relief and inflation accounting will feature in our deliberations.

There is a measure of common ground between us.
However, there are criticisms to be advanced of the case which the hon. Gentleman deployed, no matter how eloquently and however embroidered with hyperbole it may have been. He does not appear to have given ample recognition to the fact that in the Finance Bill, short though it was, we managed to work into it claims for partial relief. That had been asked for over the years and at last it was conceded. Stock relief was originally designed as relief for liquidity in the business sector. By definition, the relief should operate in a year when a business man's or a company's liquidity is affected.
The hon. Gentleman's amendment will enable unclaimed relief to be carried forward to a year when it is by no means self-evident that there will be a shortage of liquidity in the case of the person who claims it. It will be administratively complicated. Companies will be excluded. The general principles which he has advanced to support his case are good and there can be no good reason for excluding the corporate sector, except on a rather specious ground. I am sure that it will not have occurred to the hon. Gentleman that he is making a great case for the self-employed in this evening's debate. There are various other points, of technicality but importance, as to what would happen if there was a change in persons carrying on the business.
Why should the case of a business man, who instead of making a partial claim in one year made no claim at all, not receive the advantage of the amendment? The general principles behind the hon. Gentleman's amendment are good and sound, and why should that case not be taken care of? Therefore, I do not think that the hon. Gentleman has made out his case in principle. I think that he will be the first to recognise, being a generous-spirited person, that there are a considerable number of technical situations which are not covered by the amendment and which, if the principles are good principles, should be covered.
9.45 p.m.
However, to reassure the hon. Gentleman and the House, perhaps I may say that we shall be looking at the taxation of business profits, particularly for the


corporate sector. This is the kind of point which I hope we shall catch up with and reconsider, although I hold out no particular hope and offer no particular commitment that the matter will be deserving of a legislative cure.
On that basis, I hope very much that the hon. Gentleman, having made his point and deployed it with his usual eloquence, will not feel obliged to take the matter further, at any rate at this stage.

Mr. Richard Wainwright: I find the Minister of State's reply very disappointing on several counts. First, his promise is very unsatisfactory, because he goes out of his way to say that it is corporate profits that are to be looked at. It was in consideration of that sort of attitude that my amendment was designed particularly to relieve the self-employed, the sole trader or the man who is in a partnership but is not part of a company structure.
I shall be glad to give way to the Minister if he wishes to correct his statement and to say that it is all business profits, and not business profits especially in the corporate sector, that are to be looked at. If the Government allow this gimcrack-type of relief, in one of the most arbitrary, banana republic-type statues that we have ever had in this country, to remain for another year after the next Finance Bill, they will be guilty of tolerating the most awful unfairness.

Mr. Peter Rees: I think that the hon. Gentleman got my words accurately, because he repeated them. I very carefully said "business profits", and although I put particular emphasis on corporate profits I did not exclude other forms of business profits. I hope that that meets the hon. Gentleman's lingering anxieties.

Mr. Wainwright: That is a great improvement. I am glad to hear it and that it is on the record. It is a useful promise to have extracted from the Minister—even with some difficulty.
However, I must go on to express my great dissatisfaction that in trying to deal with my amendment the Conservative Minister of State took over holus-bolus the arguments which were served up by the previous Chief Secretary to the Treasury when he was rejecting amend-

ments of the same kind. To have the words of Heywood and Royton recited from Dover and Deal is almost more than flesh and blood can stand. Whenever he was in difficulty—and all Ministers have been in appalling difficulty over this absurd type of relief—the previous Chief Secretary, the beloved right hon. Member for Heywood and Royton (Mr. Barnett), started taking refuge by saying that this relief was simply to help companies at times when they were embarrassed by problems of liquidity. This is a caricature of a defence for this relief.
Perhaps I may pray in aid the situation with which I think all hon. Members will be familiar in connection with traders in their constituencies who were affected at the very end of their trading year last winter by the failure of deliveries through the lorry men's strike, a failure which sometimes completely exhausted the trading stocks of certain types of traders. For instance, this applied to people dealing in agricultural products, food and so on.
This particular form of relief has the effect that if on the one closing day of the trading year a total accident has reduced the trader's stocks to abnormally low levels, he loses any prospect of relief that year and, worse still, is subject to a full clawback by the Revenue of previous relief which he has had in other years. Yet that situation does not in the least mean that his liquidity troubles are at an end, because for the whole of the rest of the 11 months and three weeks of the trading year he may well, in these inflationary times, have been trying to bear the burden of financing inflated stocks. It was only through the accident of the final week of the year, when the strike deprived him of supplies, that he lost his relief and was subject to the vicious clawback provisions.
Therefore, the argument that all this is to do with liquidity fails completely when the relief itself goes nowhere near touching the real problems of maintaining a high trading stock week in and week out through the greater part of a trading year. I am surprised that the Minister of State should have taken over this feeble argument, which was knocked about in Committee upstairs year after year on previous Finance Bills, and should be retailing it to the House in an attempt to resist this amendment.
I have to acknowledge, however, that, as is often the fate of those on the Liberal Bench, the big battalions are against us. In the circumstances, with a sharp eye on the Minister's performance next year, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16

UNITED STATES DOUBLE TAXATION CONVENTION

Mr. Graham Page: I beg to move amendment No. 6, in page 7, line 28, leave out 'notwithstanding that' and insert 'except as far as'.
Clause 16 deals with double taxation relief and the convention on that subject between the United Kingdom and the United States of America. I should like to explain the amendment by going back to the origin of double taxation relief.
Any relief from being taxed twice in different countries on the same income starts with a treaty between the United Kingdom and the other country concerned. It eventually comes to this House by way of an Order in Council in order to introduce into our law what has been agreed over the double taxation relief between the two countries. It comes first before the House in a draft Order in Council for approval of the House. That is what happened with the earlier convention—not the one mentioned in clause 16, but that of 1945 between the United Kingdom and the United States. The convention of 16 April 1945 and its supplementary amending protocols in 1946, 1954 1957 and 1966 were all approved, so far as they deal with double taxation relief, by Orders in Council which have been approved in draft in this House. The law of this country, which grants double taxation relief as between the United Kingdom and the United States, is embodied in orders which confirm the convention of 1945.
Clause 16 refers to a later convention of 31 December 1975 which has since been amended by an exchange of notes in April 1976 and by protocols in August 1976, March 1977 and March 1979. Strangely enough, the convention, the exchange of notes and the first two protocols, I understand, have already been approved in draft by this House but have

never gone forward to be made complete Orders in Council. They stand in a form of suspense. The last protocol, as recently as March 1979, would seek to terminate the 1945 convention from 6 April 1976 and to apply the 1975 convention and the protocols retrospectively to April 1976. None of these—the 1975 convention nor the protocols—has been embodied fully in Orders in Council. At the moment, therefore, they are not law.
Clause 16 would permit an Order in Council to be retrospective back to 1976. If that were to give citizens or residents of this country extra relief, I should have no complaint, but in fact it will deprive certain residents of relief of tax which they will have enjoyed over four years since 1976–77. They are to be deprived of that relief by retrospective legislation.
I do not believe that the House of Commons has ever before sanctioned retrospective taxation, which is what this is, by Order in Council requiring the approval only of this House. It should be remembered that these Orders in Council do not need to be approved in another place. Certainly the relevant provision of the parent statute under which these orders are made, section 497 of the Taxes Act, does not authorise an Order in Council which has retrospective ffect. That is the reason for clause 16—to enable an Order in Council under section 497 of the Taxes Act in this case, referring to the particular convention, to be retrospective. That is the need for clause 16 if the Government wish to make this retrospective.
Do we need a new constitutional procedure of this kind in order to claw back relief from certain residents who have enjoyed such relief for four years? Are our resources so short that we have to have this constitutional monstrosity of retrospective taxation against a few people who have had relief under the law as it now stands?
That is the effect of clause 16, and it is thoroughly unconstitutional. Surely, rather than put such a provision on the statute book, we could forgo this claw-back of relief from just a few people. We could forgo creating an unconstitutional precedent which will be extremely dangerous in the future. We have never allowed retrospective taxation by Order


in Council to be done by this House alone, and I hope that we shall not do it this time.
If my amendment is accepted, it will mean that we can approve the convention of 1975 in all respects except as far as this item of retrospective taxation is proposed to be applied. I present the amendment only to uphold the constitutional rights and practices of the House.

Mr. Peter Rees: As one would expect, my right hon. Friend the Member for Crosby (Mr. Page) has deployed a powerful case which deserves the most serious consideration. It is none the worse for the fact that we debated it at an early hour in Committee only a few days ago, and I suppose that we should come back to good points and consider them a second time. However, I am not entirely certain that my right hon. Friend has not put his case a little high, and I hope to be able to explain to the House how this situation came about and what clause 16 is designed to do.
My right hon. Friend is perfectly correct to say that clause 16 would pave the way or enable us to lay and to debate in the House an order embodying in our domestic legislation a double taxation convention which was initiated some years ago, in 1975, and which has been amended by three subsequent protocols.
I stress, as I stressed in Committee 10 days ago, that clause 16 does not attempt to prejudge the merits of the double taxation convention and the amending protocols. It is merely an enabling provision because, as my right hon. Friend said, there is some doubt that section 497, which enables double taxation conventions to be embodied in our domestic legislation, will cover the special facts of this case.
10 p.m.
The original convention, which was designed to supersede an earlier convention negotiated in 1945 and amended subsequently, was negotiated in 1975. It was published in January 1976 and its terms have therefore been known for three years or more. It was debated by the House, when the merits were carefully considered, and approved in January 1977.
Subsequently the convention has had a rather chequered course because the question of States' rights and the unitary system of taxation came up in the United States. The Senate entered a reservation and it was therefore likely that the convention as originally drawn would not be approved by the two-thirds majority which the Senate requires.
I do not think that it is necessary to debate the unitary system that is prevalent in California, Oregon and Alaska. We can debate the merits or demerits of that if the order is laid before the House. I touched on the matter in Committee and my hon. Friend the Member for Surrey, North-West (Mr. Grylls) has made considerable representations on the subject. I recognise the reservations that may exist. However, I do not think that that is the thrust of my right hon. Friend's arguments. He is concerned with the retrospective element.
I concede that in a technical sense there is a measure of retrospection, but it is mitigated by the fact that the terms of the convention have been known for three years or more and the merits of the convention were debated and approved by the House in January 1977. No one can claim that he has been taken unawares.
The difficulty that we face is that the matter has been long drawn out and the new convention is designed to impose a fresh series of reliefs and to supersede the reliefs conceded under the 1945 convention, as amended. The reliefs were designed to come into effect broadly from 1976, but there was a transitional provision—and there will be such a provision if the House approves the order—to enable a taxpayer to choose, for at least one transitional financial year, whether he would prefer to have relief under the old convention or the new one. Considerable care was taken by the previous Administration—and I entirely approve of their action—to ensure that as much as possible will be done to ease the transition from one convention to the other.
The matter has dragged on for three years or so, which is unprecedented in these matters. The delay has been caused by reasons outside the powers and duties of the House or the previous


Administration. I do not level any criticism at the previous Government for the delay. It has been caused for reasons that I understand and it would be improper for me to go into them further. They were concerned with the unitary system of taxation and the question of States' rights.
If the order is approved, we shall substitute the new reliefs back for a period of about three years. My right hon. Friend is right to say that that is unprecedented, but the situation that our proposal is designed to meet is equally unprecedented. No one can honestly claim that he has been taken by surprise. The terms of the convention embodying the reliefs have been known for more than three years and have been debated by the House.
This, therefore, is not a question of something being sprung on an unsuspecting taxpayer by an over-zealous regime. I do not wish to suggest this as a good reason for adopting this provision, but if anyone is disadvantaged it will be largely United States residents. I do not pray that in aid, but my right hon. Friend suggested that injustice was being done on this side of the Atlantic rather than on the other. The best advice that we have received is that it is likely to be the other way.
In this somewhat special situation, therefore, we should bear in mind that the effective points of the convention have been known for more than three years, that the merits were debated by the House in January 1977, and that clause 16 is only an enabling provision and does not attempt to prejudge the merits of the order. That order can be embodied in

our domestic legislation only if it is approved by this House.
As I indicated in Committee, I propose to go personally to the United States to reassure myself and, I hope, to offer some reassurance to the House on other aspects—[HON. MEMBERS: "Oh."] It is at this point, since this is a replay of our earlier debates, that I am happy to receive the unstinted support of Labour Members.
The clause is an enabling provision, and if the Government feel that it is right to lay an order before the House embodying the new convention and the three protocols there will be ample opportunity to judge the whole question of the unitary system which exercises the minds of so many people outside and inside the House.
I recognise the points that my right hon. Friend has made, and I hope that on reflection he and the House will accept that this is the merest technicality in this case. I have made cases of considerably less power than that advanced by my right hon. Friend, but I have attacked retrospection in a more flagrant, blatant and unattractive form. However, in this case, although people will, after a period, be disabled from taking advantage of the old rules, there will be a comparable range of reliefs under the new convention, and on that basis I hope that my right hon. Friend will not feel disposed to press his amendment to a Division.

Mr. Graham Page: I rise only to thank my hon. and learned Friend for, with his usual courtesy, putting forward the full argument, and to say that I am wholly unconvinced by that argument and do not intend to withdraw the amendment.

Amendment negatived.

Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. Biffen.]

10.3 p.m.

Mr. Denzil Davies: We have had lengthy debates on this Bill on the Floor of the House, and the Opposition are grateful to the Government for bringing the Bill to the Floor of the House. That has enabled the British public, in spite of the non-availability of Hansard, to acquire some understanding of what the Bill is about. Perhaps in future we shall hold more of our Finance Bill debates on the Floor of the House—who knows?
We have had the opportunity to debate the tax proposals and the British public have had the opportunity to see how hollow were the promises of the Tory Party during the election campaign. The promises to cut taxation have not truly borne fruit in this Bill because the Bill has not simply shifted the burden of taxation from direct to indirect taxation; it has shifted the burden from the better off to the less well off, as has been shown quite clearly by our debates and by the figures we have adduced.
The first part of the Bill increases the rate of VAT to 15 per cent. That is inflationary in itself. It puts up prices by at least 3½ per cent., and probably more when one takes into account the rounding up that takes place. By putting up VAT the Government are making inflation worse. Before the Bill inflation was running at 11 or 12 per cent.
The increase in VAT has not gone on luxuries or those goods which the Chief Secretary said were discretionary. There is nothing discretionary about spending money on clothing, washing machines and on servicing one's motor car. There is no freedom of choice there. For 90 per cent. of families, that expenditure is mandatory, not discretionary. The Government are completely out of touch with the way in which ordinary people live. For a few people some of that spending is discretionary. Those who have enough money anyway can decide whether an extra few pounds should be spent on an item of clothing or a second motor car.
Many people, especially those who pay no income tax, suffer grievously from the

increased VAT rate because they derive no benefit from the rest of the Bill. The pensioner, in particular, suffers. Perhaps we have not made enough of that argument during the passage of the Bill. The person who has no income other than the basic retirement pension does not receive his increased pension until November, but he has to bear the increase in VAT until November.
Basic rate pensioners do not benefit from the cuts in the basic rate of income tax, although they benefit from the increases in personal allowances which are brought into effect almost immediately. Pensioners are examples of the many people on the lowest levels of income who suffer from the increase in VAT. It is an inflationary increase. It is unnecessary at a time when inflation is rising because of external factors.
We have argued that the VAT increase is damaging to industry. Certain sectors of industry must suffer because the rate is too high. The debate on the theatre reflected that argument. Once VAT is at 15 per cent., there must be a multiple rate for VAT. Continental countries, apart from two, operate different rates for VAT. In France the basic rate is 17 per cent., but there is a 7 per cent. rate for the theatre. No doubt there are other rates for different industries. That applies to most European countries.
If the rate is higher than 10 per cent. one cannot operate a uniform rate which is as high as 15 per cent. One must make an economic choice and decide on priorities because of the harm that can be done to certain industries. The textile, furniture and footwear industries are already under pressure. They will be put under more pressure as a result of the VAT increase.
I am surprised at the Conservative Party because when it was in Opposition it told us that most of the growth in the British economy recently has been in the service industries. That is right. Yet the service sector is particularly hard hit by the increase in VAT. Small garages, for example, will be affected. The 15 per cent. VAT on the repair and maintenance of buildings will hit many small building firms. Conservative Members are always concerned about small industries and


small businesses. We have heard them talk about the builder in a small way of business, but he will suffer grievously as a result of 15 per cent. VAT and from other measures such as the high interest rate.
I quote from the publication entitled Estates Times. It is not a Left-wing publication, but it is quite interesting. It represents the building industry. The article states:
The slashing of £440 million in the Budget off spending on construction work … is one part … But even worse in its effect on the industry is the 15 per cent. VAT. Nothing will do more to kill work on maintenance and repair. Obviously CABIN"—
my hon. Friends will know that that organisation was established to deal with the non-existent threat of nationalisation—
never realised that the Iron Maiden (to be seen in Nuremburg) is an instrument of torture which killed by a thousand stabs.
That is the Estates Times making it clear that high interest rates and a VAT level of 15 per cent. grievously affect the building industry.
The tourist industry is similarly affected. A report was issued tonight by the chairman of the national council of the British Hotels, Restaurants and Caterers Association. It makes clear the damage that the VAT rate will inflict on the tourist industry and hotel industry at a time when they are under considerable pressure because of the increase in the value of the pound and the fact that fewer visitors are coming to the United Kingdom.
All the service industries in which growth has taken place in the past will be damaged as a result of a penal rate of VAT. The Opposition have argued that if we have a VAT rate of 15 per cent. we must exempt certain industries or reduce the rate for those industries.
I turn from VAT to income tax. One wishes that the VAT increase was a ghastly mistake and was done without thought, but in fact it was a deliberate act of policy to provide the money to permit income tax cuts. The cuts will be enjoyed by only very few. On the Chancellor's figures, most people earning up to £5,000 a year will be worse off as a result of the Budget.

Mr. Wickenden: Does the right hon. Gentleman accept that the Chancellor said that 1·3 million people would be removed from tax entirely? Why are they worse off?

Mr. Davies: The hon. Gentleman was not a Member of this place when we had those spendid debates about truth in taxation, when Conservative Members used to educate Treasury Ministers of the then Labour Government by arguing that taking people out of taxation was not taking them out of taxation at all because they should never have been there in the first place and that they would not have been there but for inflation.
The fact is that 90 per cent. of wage earners are worse off as a result of the Budget. They will be paying more combined tax in income tax and VAT. An illuminating answer was given in another place to Lord Kaldor by Lord Cockfield, a Minister of State at the Treasury. He made it clear that a person on two-thirds of average earnings last year would have paid a total of direct and indirect tax of 27·7 per cent. and that this year, following the Budget, he will pay 28·6 per cent. A person on average earnings will pay exactly the same percentage and the person on one and a half times average earnings—for example, £7,500—will pay slightly less. However, when the other factors in the Budget are taken into account, the person on one and a half times average earnings will not be better off. The fact remains that a person has to earn at least £10,000 a year before he will receive any benefit from the Finance Bill, taking into account the other consequences of the Budget.
This is not a Budget to provide opportunity for those earning less than £5,000 a year. It is not a Budget for the middle manager or the skilled worker. Those persons will not get anything out of it. It is a Budget for the very few who are earning more than £10,000 a year. The Red Book bears that out. The total tax remission for those in the higher rate band and for those with investment income is £850 million. I contrast that sum with the ridiculous statement that was made yesterday by the Secretary of State for Industry. The right hon. Gentleman announced that he would be knocking off £250 million by way of grants to industry in the poorest areas of Britain. However,


£850 million is remitted just like that in the Finance Bill.
Does the Chief Secretary believe that any of the £850 million will go back into the regions that lost £250 million yesterday as a result of the Secretary of State's announcement? Most of it will go abroad into houses, property and shares when the Government free exchange controls. None of that money will come back into investment.
If we add the benefit to the higher rate taxpayers of the increase in personal allowances we arrive at the figure of about one-third of the total tax remissions in the Budget. About one-third probably goes to people earning more than £10,000. About 500,000 people will probably receive about one-third of the total tax remissions in the Budget. The other 90 per cent. of the wage earners must pay for that as a result of the VAT increase. This is a surtax payer's Budget. It is the Selwyn Lloyd Budget of 1962, the Anthony Barber Budget of 1974. It is a Budget for higher rate taxpayers and surtax payers.
The Chancellor argued that these provisions would increase incentives, that people would work harder and that the man on £100,000 a year would receive an 80 per cent. increase in his income as a result of the tax cuts, work harder, contribute more and invest more in the economy. I do not think that many Members of Parliament believe that any more. The Chief Secretary, who is an honourable man, retreated into a moment of fiscal argument. He talked about freedom. It was not a comprehensive freedom. He referred to freedom to pay less tax. He retreated into the concept of freedom to justify the reduction in the higher tax rates.
The Bill will add to what the other budgetary measures—we must take them together—will do. I refer to the Government's monetary policy and their policy of high interest rates. The manager of one of the largest discount houses in the country said that interest rates may have to go up. The fact that the pound is high is not necessarily the fault of the Government. The effect of their measures will be to turn many areas of manufacturing Britain into industrial deserts. Our manufacturing industry

will go downhill as a result of the Government's measures.
The Chief Secretary has spoken of freedom. I am tempted to paraphrase Tacitus and say that the Government create a desert and call it freedom. The Chief Secretary tells us that that is freedom. In effect, it means the demise of our manufacturing industry.
We shall continue to argue this case. We may lose the vote tonight. We reject the philosophy behind the Bill. We shall argue until the Government change course or until the British people say "Enough" and throw them out.

10.23 p.m.

Mr. Richard Wainwright: The right hon. Member for Llanelli (Mr. Davies) commented favourably on the fact that the Bill had been dealt with entirely on the Floor of the House. That was excellent for Back-Bench Members, who made first-class use of the opportunity. Certainly the Government have failed miserably to take advantage of their enormous opportunities to explain their financial policies and to inspire the country to rally behind them. The opposite has happened. The Finance Bill debates have served to show that many Treasury Ministers had many different opinions and indeed many different philosophies. As the Bill proceeded night after night on the Floor of the House, it was an entrancing but depressing spectacle to find that the Government spoke with four Treasury voices—and not with one and a half as did the previous Government.
It is not necessary to speak at length about the Bill. The country has already pronounced its opinion on it. The Bill and its proposals have fallen entirely flat in the country, although they were supposed to have had a tremendous, energising, dynamising and galvanising effect. I always rejected that metaliurgical simile. I never wanted our business men to be galvanised. It would be most unattractive to have rust-proofed business men in our midst.
The Bill has fallen entirely flat. The magic moment, when weekly wage earners received in their wage packets the first fruits of the Tory Budget, has already passed. What has happened? Have the church bells been finging? Have people been rushing to work an hour earlier


wearing T-shirts labelled "Entrepreneur"? Not a bit of it. The whole thing has fallen dismally flat and the average working man is unaware that he is any better off for working harder under the Tories. All this was entirely predictable, and it has happened.
The second reason why the Bill has fallen flat is a matter for great concern in the House. Far and away the most damaging provision in the whole Budget—the quite horrendous rates of interest which our entrepreneurs of this new risk-taking age are called upon to bear—has gone through without the House being able to do anything about it. My Liberal colleagues and I maintain that this country cannot be called a democracy when interest rates and the management of sterling are entirely outside the powers of this House.
It is a great rebuke to the House of Commons that we allow highly centralised decisions to be taken in this way. Let not the Chief Secretary talk of the beneficent effects of millions of separate decisions in millions of pluralist power centres. These are highly centralised decisions over which our democratic institutions have no control whatever. The fact that they are also very stupid and short-sighted decisions adds to the effect.
These debates have proved what many of us feared—that the popular course on which the Conservative Party went to the country, and got a spurious fiction of a mandate, is composed of two totally contradictory elements—a highly depressive, deflationary monetary policy and a fiscal policy which is supposed to encourage enterprise and risk-taking. Those two contrary concepts cannot be married together and can only result in disaster.

10.27 p.m.

Mr. Nicholas Winterton: I listened with interest to the articulate but misguided philosophy advanced by the right hon. Member for Llanelli (Mr. Davies). I have great admiration for him, but I think that he totally misunderstood the whole strategy behind this, the first Budget of the new Conservative Government. I believe that purposely he misrepresented the Budget, because my right hon. and learned Friend the Chancellor of the Exchequer made perfectly clear that it is the Government's intention to make further tax cuts—that is,

cuts in direct taxation—while the increase in value added tax is an increase which will be for the whole Parliament, and he does not envisage any further increases in VAT during this Parliament.
I look forward, therefore, with anticipation and pleasure to the incentive—which, I agree with the hon. Member for Colne Valley (Mr. Wainwright), is not yet with us—to encourage more and more people to work harder and to invest harder, because this is basically the strategy behind the Budget. I believe that the reductions in direct taxation are but the first tranche of a reduction in direct taxation which will take place under the present Conservative Government.
I say to my right hon. Friend the Chief Secretary that I look forward to seeing, within the next 18 months to two years, the basic rate of tax being reduced from 30p in the pound to 25p in the pound, which I believe was a commitment that we gave during the last general election. I would then believe that the views which have been expressed by the hon. Member for Colne Valley would be valueless. Far from having a spurious mandate, as he described it, I believe that having a majority with more than 2 million votes over the Socialist Party in the last general election is not a spurious mandate but a positive mandate by the people of this country who wished to see a change of direction in the economic management of this country. Indeed, the whole Budget that was courageously promoted by my right hon. and hon. Friends on the Front Bench represents that change which has long been sought by those people in this country who will produce the wealth which will create the employment which was so sadly lacking under the last Government.

Mr. David Alton: rose—

Mr. Winterton: I give way to the hon. Member, and I hope that his intervention will be relevant.

Mr. Alton: Indeed it is relevant. Will the hon. Gentleman tell the House how many people in his constituency earn between £10,000 and £25,000 and will, therefore, receive any benefit as a result of the Budget? Secondly, the hon. Gentleman talked in terms of having some kind of mandate from the people of this


country; but only one-third of them voted for either him or his party.

Mr. Winterton: I regret to tell the hon. Member that rather more of my constituents are earning the higher rates of income than the constituents of Edge Hill. I should also tell him that I polled approximately 60 per cent. of the votes cast in the Macclesfield constituency. Therefore, the argument in relation to proportional representation is totally irrelevant. It is one of the bogus non-senses that is perpetually promoted by the Liberal Party.
I can also indicate that, since the announcement on regional aid was made yesterday, a number of business men in my constituency—which has lost its intermediate status—have advised me by telephone that they are fully behind the Government in the policy that they are now following. I only regret that the distortions which regional aid has created have not been further reduced by the decisions that have been made by the Government.
The right hon. Member for Llanelli raised several important matters that I hope will not be ignored by my right hon. Friend the Chief Secretary. I am gravely concerned about the effect of the VAT increase on the construction industry. It seems rather extraordinary at the present time, when we are urging the country to conserve energy. The construction industry can play a major part in this by improvements to houses by the various adaptions to property—

Mr. Eric S. Heller: rose—

Mr. Winterton: With no disrespect to the hon. Gentleman, whose interest in the construction industry I am well aware of, I am endeavouring to be brief. I want to refer directly to a matter that was raised by the right hon. Member for Llanelli. At a time when we are urging this country to conserve energy, I am concerned that the building industry—which can make a major contribution to energy conservation, particularly the smaller builder, through improvements and adaptations to property as well as insulation—should now be subject to an increase in VAT which undoubtedly will deter many people from being in a position to afford improvements to their property that could result in energy conser-

vation. While I do not expect any positive reply from my right hon. Friend, I hope that this matter has been taken on board.
Finally, I want to mention a subject that is very important to rural areas, although perhaps not to urban areas. I refer to representations made to the Government by the National Federation of Taxicab Associations. Taxicab owners are gravely disadvantaged by the increase in VAT, because without a decision of this House and the Home Secretary, and without a decision of the local authorities, they are not in a position to increase their fare rates. However, they are subject to the increase in VAT.
Many people who operate taxis are not within the limits of those who are exempted from paying VAT. Therefore, out of a fairly narrow profit margin, they will have to find another heavy rate to pay to the Customs and Excise. I know that the federation has made representations to the Treasury.
I hope that this matter will be taken on board, because there are great disparities between what is happening in this country and what is happening in other countries within the European Economic Community. Public transport in general in this country is exempted from VAT, but in the majority of countries in the Community it is not. It is anomalous that in rural areas where taxis are perhaps the only form of transport for the disabled and elderly for shopping and other essential services and duties of life they should be subject to VAT. It places a substantial additional burden on certain sections of the community who are not served by other forms of public transport. I hope that those matters have been taken on board.
I support the Budget. I believe that it is a dramatic change of direction and one that has been long overdue. I congratulate my right hon. and hon. Friends on the Front Bench on the articulate and forceful way that they have promoted the change of direction. Whether or not it is accepted by the Opposition parties, these policies were spelt out by my party at the last election, and whether or not they like us to honour our manifesto we are pledged to do so.
I say to my right hon. Friend the Chief Secretary, who is perhaps one of the most able promoters of Tory policy, that if we


spell it out in rather more clear terms and indicate what our ultimate strategy is, I believe that we shall be in power not just for one Parliament but for at least a decade and perhaps even two.

10.37 p.m.

Mr. R. B. Cant: On the Labour Benches we are under great pressure not to engage in long speeches, but I should like briefly to take up the point of the hon. Member for Colne Valley (Mr. Wainwright) about the rate of interest. It was put up in the Budget by a fiat of the Government, without any discussion. The purpose of raising the rate of interest was to bring pressure to bear on the growth in money supply and in particular on bank lending, which was proving to be a source of increase in the money supply. It is obvious that the money supply is running almost out of control. That is a consequence of the fact that bank lending is going ahead at a rapid rate, so much so that Barclays Bank this year will declare larger profits than the biggest industrial company in this country, which I believe is ICI.
It has been suggested that because of the failure of the MLR at 14 per cent. to bring bank lending and, therefore, the money supply under control, the rate of interest will be once more increased. I hope that the Chief Secretary will say whether that is true. If it is, it will be wholly disastrous. If the answer is "No", will he adopt physical controls over the banking system in the hope that the money supply will be reduced in that way?

10.40 p.m.

Mr. Alexander W. Lyon: The strongest argument that Labour Members have against the Budget is the way in which it burdens the standard of living of ordinary people in order to give tax handouts to the better off. The most significant aspect of the increase in VAT has been in food. Conservative Members say that VAT is not levied on food, but it is now levied on a section of food which represents about 25 per cent. of consumer expenditure. If that area were zero rated it would cut the retail price index by 1 per cent. Therefore, it could not continue to be a significant factor towards increasing the burden upon ordinary people.
I hope that we shall be able to discuss the matter in future. This time the Gov-

ernment have obviated the possibility of discussing it by so framing their Budget Resolution that it was not possible to talk about it. However, I am sure that for those who rely so heavily on this item of expenditure in their family budget the imposition will continue to be a running sore.

10.42 p.m.

Mr. Robert C. Brown: I declare a dual interest. There is a large Rowntree Mackintosh factory in my constituency and workers in that factory are organised by the National Union of General and Municipal Workers, by which I am sponsored. I support my hon. Friend the Member for York (Mr. Lyon) in his remarks and I am seriously concerned that the jobs of my constituents in that factory are being seriously put at risk by the imposition of the extra 7 per cent. on the products that they manufacture.

10.43 p.m.

Mr. Anthony Beaumont-Dark: In Birmingham about 7,000 people are employed in the confectionery industry. When the economic policies of the Government have brought the country to prosperity, and when we are able to adjust taxation upon this area of the food industry, I hope that snack foods—which form a great part of people's expenditure, about £1,000 million of the total of £4,000 million that is spent upon food—will be zero rated.

10.44 p.m.

The Chief Secretary to the Treasury (Mr. John Biffen): The right hon. Member for Llanelli (Mr. Davies) pointed out that we have laboured under the disadvantage of the non-publication of Hansard. I endorse what he said. The House properly believes itself to be the microcosm of the nation when debating the Budget, and its debates cannot be properly reflected by relying on the national press. One of the most fundamentally radical and reforming Budgets has been presented to the nation and it has been debated constructively, and we have all laboured under the current arrangements for reporting our proceedings.
It is the determination of this Government that VAT should be at the single


rate of 15 per cent. The right hon. Member for Llanelli made the point that, in the view of the Labour Party, a single rate of VAT cannot go beyond 10 per cent.; thereafter we have to revert to a system of multi-rate value added tax.
I ask my hon. Friends to reflect just what that would mean in the burgeoning situation of paradox, contradiction and totally unacceptable marginal decisions. Indeed, the ghost of Gerald Nabarro would come to haunt us if ever we reverted to a multi-rate VAT. I am surprised that the right hon. Member for Llanelli, who, broadly, is a good, sound, gilt-edged British patriot, should pray in aid that this was the practice in most Continental European countries.
I am now happy to turn to the second consideration—clause 5 and income tax. It is perfectly true that this Budget brings the top rate of income tax into broad alignment with those of other OECD economies. That it does—no more and no less. Upon that modest reform is constructed the whole apparition of some kind of Tory regressive attitude designed to grind the faces of the poor and to enrich the substantial. It simply does not bear one moment's examination. The amount of revenue that is at stake in bringing into alignment our top rates is minimal. That is known by the Opposition. In my judgment, they play dangerously when they try to inflame any class considerations in this particular issue.
Thirdly, in clause 14, which concerns capital allowances, we have made arrangements so that they shall be modified in respect of motor vehicles. I say this because I believe that it indicates a future pattern: that is, of a determination to attack the whole question of tax abuse and tax evasion. I believe that this becomes much more acceptable in the context of personal tax rates which we are now establishing.
It would be absurd for me, on Third Reading, to pontificate upon directions in which this policy could be pursued, but my hon. and learned Friend the Minister of State has indicated that the Government will be looking at the whole question of benefits in kind. However, I should like to take the argument just one stage further, and I hope that I shall carry both sides of the House with me in this respect.
There ought to be real consideration of the size of the tax base and of the necessity to protect the tax base. Over the years, we have established a whole system of exemptions and privileges, which I think will naturally be re-examined in the light of the fiscal arrangements which we are now putting into effect. I personally was very pleased that the Institute for Fiscal Studies was able to make its report upon the tax base and the problems that were created by the size of current tax exemptions. I should like to place on record the view that tax exemption is a blood relative of public spending. Hon. Members may wish to reflect upon that in due course, as we enter upon subsequent Finance Bills, within the context of personal taxation as now described in the current Budget.
In that context, I must say to the hon. Members for York (Mr. Lyon) and Newcastle upon Tyne, West (Mr. Brown), and even to my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), that there are always compulsive reasons why one can argue an exemption from this tax or that tax in respect of this product or that class of persons. But over the years and in their totality such arguments dangerously narrow the tax base. We in this country are operating a value added tax with as narrow a base as any within the European Community.
The fourth point is in respect of clauses 17 to 21 by which we are seeking to establish a petroleum revenue tax regime which I hope will command broad support on both sides of the House. Whatever the actual level of tax that may be settled, I believe it is important for the oil industry to know the tax regime within which it is expected to operate in future.
This brings me to the question of the Budget judgment contained in this Bill. I should like to comment on the points made by the hon. Members for Colne Valley (Mr. Wainwright) and for Stoke-on-Trent, Central (Mr. Cant). To the hon. Member for Colne Valley I say that I believe that it would be unwise to extend the political control over the Bank of England. If anything, the arguments point in the opposite direction. The Bank needs less, rather than more, influence from the politicians.
The hon. Member for Stoke-on-Trent, Central asked a direct question that is relatively easy to answer—whether I would indicate the future trend in interest rates and whether I would give a categoric statement on interest rates. The hon. Gentleman knows that I am in no position to give a categoric statement on interest rates. I have the encouragement of the right hon. Member for Leeds, East (Mr. Healey) in that course of virtue. The right hon. Gentleman would not wish to deflect me from it.
A point that must concern every hon. Member is the extent to which we balance borrowing, public spending and interest rates. The current situation demonstrates that every penny of the revenue in the Finance Bill, to which we are asked to give a Third Reading, is needed. It demonstrates that we are perilously poised around a borrowing requirement of £8,000 million. That is no situation in which any Government reasonably would expect to find themselves. It means that we have to adjust our public spending policies accordingly.
The official Opposition, I believe, have broadly accepted that the borrowing requirement could not be higher than is presently proposed. They have accepted, broadly speaking, the money supply targets. I assume that they will accept the Administration's public spending reductions.

Mr. Denis Healey: rose—

Mr. Biffen: I should like to finish making this point.
They argue, however, that the mix of taxes by which we raise our revenue—I thought I would anticipate the right hon. Gentleman—is fatal because of its impact on the retail price index. That would have been more credible an argument if it had not come from those who had argued that by the manipulation of value added tax in 1974 they could produce a rate of inflation of 8·4 per cent. We know from experience that the rate of inflation bore no relevance to the manipulation of the retail price index via value added tax in the summer of 1974. Their argument is a shadow argument.
The reality is that we are confronted with a situation in which the retail price index undoubtedly increases. But so does take-home pay. The question is how that situation will be played off ill wage negotiations this autumn. In respect of the Bill, the reality is that public spending lies at the heart of all Budget strategies. In the Bill there is shown a valuable and imaginative flair in adjusting the individual tax components of the total revenue. My right hon. and learned Friend the Chancellor of the Exchequer deserves the esteem and the respect of the nation.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 313, Noes 260.

Question accordingly agreed to.

Bill read the Third time and passed.

COUNCIL HOUSE RENTS (CUMBERNAULD AND KILSYTH)

11.8 p.m.3

Mr. Dennis Canavan: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Housing (Limitation of Rent Income Increases) (Cumbernauld and Kilsyth District) (Scotland) Revocation Order 1979 (S.I., 1979, No. 669), dated 13th June 1979, a copy of which was laid before this House on 20th June, be annulled.
The motion is supported by over 80 right hon. and hon. Members.
About 18 months ago the House was debating what is now the Housing (Financial Provisions) (Scotland) Act 1978 and the proposal to remove the statutory maximum annual rent increase of £39. Many hon. Members, including myself, stated our opposition to its removal and eventually we persuaded the then Government to reach a compromise whereby the Secretary of State would have reserve powers to intervene if he thought that a local authority was trying to impose a rent increase that he considered to be excessive.
Many of us predicted at that time that some local authorities would be so irresponsible that if the statutory maximum rent increase were removed they would try to levy exorbitant rent increases on council house tenants.
Those predictions have been proved right, because about 12 months later the SNP-controlled Cumbernauld and Kilsyth district council put forward a proposal to raise rents by an average of about 40 per cent. I made representations to the then Secretary of State—my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan). On 29 March this year he responded by tabling an order to place a maximum average rent increase of £59 per annum. This was the first time that the Secretary of State had used his powers under the 1978 Act.
Unfortunately, before the order came into full effect the general election intervened. Shortly after the general election the new Tory Secretary of State tabled an order to revoke the previous order. He did not even have the courtesy to inform me that he had tabled the order. However, I found out and I have raised this matter several times on the Floor of the House.
At the last Scottish Question Time I was told by the Under-Secretary of State for Scotland—the hon. Member for Edinburgh, Pentlands (Mr. Rifkind)—who is responsible for housing in Scotland that there were no good grounds for interfering with the district council's discretion.
Since then—and before—I have been in touch with the district council. From the correspondence that I have had with Provost Murray, I understand that his case rests on three points. The first is that the rents in Kilsyth and Cumbernauld district are low compared with the rest of Scotland. The provost has been known to say that the rents are the lowest in Scotland. That is untrue. I have checked and I find that in Cumnock and Doon Valley and Monklands, for example, the average rents are lower.
However, the rents of Cumbernauld and Kilsyth district council council houses are lower than the Scottish average. That is because of the wise housing investment policies of the previous local authorities before reorganisation. They were Labour-controlled and included the Dunbartonshire county council, the Stirlingshire county council and the former Kilsyth town council.
They invested in public sector house building at a time when money was relatively cheap to borrow. They built up a good stock of pre-war and post-war houses. In May 1975 they handed over a stock of 4,273 houses. By September 1978 the district council housing stock stood at 4,370. That is a miserable 97 houses that Provost Murray and his SNP-controlled council have managed to construct in three and a half years—an average of fewer than 30 houses per year.
Secondly, the provost argues that the rents of district council houses are low compared with the rents of other public sector houses in the district—notably the Cumbernauld development corporation houses. I shall leave my hon. Friend the Member for Dunbartonshire, East (Mr. Hogg) to answer that argument, because the development corporation houses are in his constituency.
Thirdly, the provost argues that the new housing support grant means an unfortunate reduction in subsidy of over £200,000 for this year alone. He quoted that figure in a letter to the Secretary of State, dated 13 July. I have checked that


figure—as I check many of the provost's statements—and I find that that is also inaccurate. There has been a reduction in the subsidy under the new system but it is of £100,000, not £200,000. The provost is only 100 per cent. wrong—which is quite good by his standards.
The provost conveniently forgets to mention in his letter that this financial year the district council carried over a surplus of £150,000 from the previous financial year and managed to freeze the rates at 11p per pound, which is one of the lowest rate poundages in the whole of the Strathclyde region. I submit that there is no case for a 40 per cent. rent increase in the district council's area. Even if there were a case for a substantial rent increase, it is surely unfair on the tenants to levy it all at once. It is also untrue to claim that there have been no reasonable increases recently. The district council has not frozen rents unreasonably. According to the latest issue of Rating Review, there has been a 73 per cent. increase in rents from 1975 to 1978. That is a slightly higher percentage than the Scottish average.
It would be most unfair if the people of Kilsyth, Queenzieburn, Banton, Kelvin-head and also Croy, in the constituency of my hon. Friend the Member for Dunbartonshire, East, were to be penalised because at the time of the stupid Tory Government's local government reorganisation they were lumped together with a new town with a different financial structure for its housing and different historical circumstances.
These people also have the misfortune to be ruled locally by an SNP authority. There is the unholy alliance of a Tory Government collaborating with an SNP-controlled district council to impose a savage and unwarranted 40 per cent. increase. It is an attack on the living standards of thousands of my constituents. It is also against the spirit of the 1978 Act. I remember that when we were debating that measure on the Floor of the House the then Labour Government stated that it was their policy, and the spirit of the Act, that any rent increases, where necessary, should be in line with increases in average earnings.
I do not know of any of my constituents who live in council houses who have had recent wage increases of as

much as 40 per cent. I claim that this is discrimination against council tenants mostly in the Kilsyth and surrounding area, where most of the council houses are situated. I claim that the discrimination is partly because the people in the area show no political allegiance to Provost Murray. He is retaliating rather like a medieval landlord by imposing excessive rent increases and getting the approval of the Tory Government.
It is a pity that the provost did not come to the House to listen to the debate. If he does not want to be branded throughout the district as one of the lackeys of the "Iron Lady", he had better change his ways. Indeed, he should resign. In any event, the electorate will get rid of him next May at the district council elections.

11.18 p.m.

Mr. Norman Hogg: I support my hon. Friend the Member for West Stirlingshire (Mr. Canavan). I have the distinction of sharing the provost and his local authority.
The rent increases are of an unacceptably high level. We are talking about a 40 per cent. rent increase, which is £71 per annum on average. This comes about because the Cumbernauld and Kilsyth district council lacks any coherent rent policy. That has been the position for a number of years. In latter days it has been arguing that there should be comparability between itself and the Cumbernauld development corporation.
In Cumbernauld 80·6 per cent. of the population live in public stock housing. That compares with 61·4 per cent in Strathclyde, 54·2 per cent. in Scotland and 31·3 per cent. in the United Kingdom. The House will appreciate that what happens to rents in one area of the public housing sector has an impact in other areas.
It is a fallacious argument to offer a comparison with the development corporation. All the CDC houses have been built in the past 21 years. The quality of the CDC houses is much higher than that of the council housing stock. The two different housing stocks have been subject to different financial provisions.
The council houses in Croy, to which my hon. Friend referred—

Mr. Gordon Wilson: Is the hon. Member for West Stirling-shire (Mr. Canavan) the friend of the hon. Member for Dunbartonshire, East (Mr. Hogg)?

Mr. Hogg: I notice that the hon. Gentleman is somewhat short of friends these days.
The position in Croy is that the housing stock is in an appalling condition. It is monstrous that the tenants in that village, where the environment is in an appalling condition because of the neglect by this district council, should be asked to face this rent increase.
The arguments about comparability of rent levels do not hold good. Elsewhere in my constituency we find council housing that is let at below the rent levels charged by the Cumbernauld and Kilsyth district council.
There are five main grounds on which I support my hon. Friend the Member for West Stirlingshire. The increases are much too large; they take no account of the age of the houses and their quality; they take no account of the loan charge relative to poor property subject to the increase; they are out of line with rent movements in Scotland as a whole; and they place the rent levels outside the average of authorities within my constituency. I believe that the Government have been motivated in this matter by their much-repeated views on council house finance.

11.21 p.m.

Mr. Gordon Wilson: I thank you, Mr. Deputy Speaker, for calling me to speak briefly on this matter. The provost of Cumbernauld, as the hon. Member for West Stirlingshire (Mr. Canavan) said—it was the only thing he said that was right—is not present this evening to answer the character assassination that was made on him by the hon. Gentleman.
In this short debate we have to deal with the complex matter of financing. The blame must rest on the former Labour Government. The provost of Cumbernauld wrote on four occasions to the then Secretary of State pointing out, from 13 November 1978 onwards, that the housing support grant allocation was so loaded that it would place an impossible burden on the Cumbernauld and Kilsyth

district, which had a special make-up in relation to housing. A large proportion are public sector houses controlled by the Cumbernauld development corporation, which has 4,000 houses, compared with the 10,000 houses that are under the control of the district council direct. The rents of the development corporation houses are fixed in effect by the Government, by means of a board appointed by the Labour Government.
The provost of Cumbernauld drew to the attention of the then Government the fact that there was a serious anomaly. It began to break through even into their dense minds that there was an impossible situation. Nothing was done. The situation remained that the district council would have to impose a heavy rate impost on those tenants of the development corporation who were paying some of the highest rents in Scotland, over which the district council had no control or influence.
When the hon. Member for Dunbartonshire, East (Mr. Hogg) claims to be acting in this matter, he is demanding that his constituents who live in Cumbernauld—although they are paying higher rents than those who live in the Kilsyth area and other areas under the control of the district council—should personally subsidise the others who live in the district council areas.
It is agreed that this is a large increase, for which the Labour Party must accept complete blame. It was their housing support allocation. Does the Minister admit that there was an anomaly under the previous housing support grant? What will he do about it? This problem will recur in Cumbernauld and Kilsyth. As changes in local government finance take place, other local authorities in England and Scotland will be affected.

11.24 p.m.

Mr. George Robertson: I want briefly to associate myself with my hon. Friends the Members for West Stirlingshire (Mr. Canavan) and Dunbartonshire, East (Mr. Hogg). This evening we saw examples of the humbug of the Tories and the usual blethering from the Scottish National Party.
It is interesting, Mr. Deputy Speaker, to note that this evening we are debating


an order made under an Act of Parliament of 1978, and that in the debate that gave my right hon. Friend the then Secretary of State for Scotland the powers to invoke this restriction on abnormal rent increases the former hon. Member for Glasgow, Cathcart, our late lamented friend Mr. Teddy Taylor—An HON. MEMBER: "Unlamented."]—well, unlamented—said in the course of that debate:
By and large the new clause is sensible. It is flexible and the Government have been rather brave to introduce it "—[Official Report, First Scottish Standing Committee, 2 February 1978; col. 283.]
Later that very same afternoon no Division took place on the clause. The clause giving the Secretary of State for Scotland that power was carried with the support of the Tories on the Committee, and they included the present Secretary of State for Scotland in the Conservative Government.
Here we have humbug yet again from the Government, and it is most appropriate that we are having this short debate immediately after the Third Reading of the Finance Bill. The Government are dedicated to reducing the standard of living of ordinary people in this country by every means possible. These people, the rudderless disciples of Milton Friedman, will show through this and so many other actions that they have nothing left to contribute to the people of Scotland.

11.27 p.m.

The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): I hesitate to intervene, Mr. Deputy Speaker, in what appears to be a private dispute between the Labour Party and the Scottish nationalist provost of Cumbernauld, but the Government's position is quite clear. It is that on this matter, unless abnormal circumstances exist, it is quite inappropriate for the Government to intervene in what is essentially a decision to be taken by the local authority.
Those Labour Members who have spoken seem to be ignoring the fact that, if their views were upheld, the burden of paying for the £600,000 deficit which the district council face would not fall on the Government. It would fall on the rest of the community in the district

council, because it would have to be paid for out of the rate fund. It would have to be paid for by the tenants of the Cumbernauld new town development corporation—tenants like local authority tenants but tenants who are already paying a far greater proportion in rent than is presently being requested by the district council of its housing tenants.
What is quite clear, Mr Deputy Speaker, is that 40 per cent. of the deficit that the district council is presently facing is a direct result of the housing support grant reform introduced by the Labour Government. They at the time were warned of the consequences of this but they now have the cheek to lecture the district council which is now trying to rectify that problem.
The rent increases proposed by the district council are 38 per cent., but the rate fund contribution being requested of the rest of the community in the district council is 76 per cent. If the views of the hon. Member for West Stirlingshire (Mr. Canavan) and the hon. Member for Dunbartonshire, East (Mr. Hogg) were accepted, all the other residents of that same area would have to pay contributions far in excess of that proportion.

Mr. Gordon Wilson: rose—

Mr. Rifkind: Therefore I say, Mr. Deputy Speaker, that this is a matter for the district council to determine. We do not instruct it as to what rent it should impose. We do not even make a recommendation to it. When it has come to this decision, the Government see absolutely no reason to reverse it or to prevent it carrying out what it believes to be the interests of its own community.

Mr. Wilson: On a point of order, Mr. Deputy Speaker. I specifically put a question to the Minister, and on the basis of the answer to that question I was intending to decide which way my vote would go in this matter.

Mr. Deputy Speaker: The point has been taken.

Question put,
That an humble Address be presented to Her Majesty, praying that the Housing (Limitation of Rent Income Increases) (Cumbernauld and Kilsyth District) (Scotland) Revocation Order 1979 (S.I., 1979, No. 669), dated 13th June 1979, a copy of which was laid before this House on 20th June, be annulled.

The House divided: Ayes 126, Noes 167.

Division No. 68]
AYES
(10.54 p.m.


Adley, Robert
Bottomley, Peter (Woolwich West)
Clark, Hon Alan (Plymouth, Sutton)


Aitken, Jonathan
Bowden, Andrew
Clark, William (Croydon South)


Alexander, Richard
Boyson, Dr Rhodes
Clarke, Kenneth (Rushcliffe)


Alison, Michael
Braine, Sir Bernard
Clegg, Walter


Amery, Rt Hon Julian
Bright, Graham
Cockeram, Eric


Ancram, Michael
Brinton, Timothy
Colvin, Michael


Arnold, Tom
Brittan, Leon
Cope, John


Aspinwall, Jack
Brocklebank-Fowler, Christopher
Cormack, Patrick


Atkins, Rt Hon H. (Spelthorne)
Brooke, Hon Peter
Corrie, John


Atkins, Robert (Preston North)
Brotherton, Michael
Costain, A. P.


Atkinson, David (B'mouth, East)
Brown, Michael (Brigg &amp; Sc'thorpe)
Cranborne, Viscount


Baker, Kenneth (St. Marylebone)
Browne, John (Winchester)
Critchley, Julian


Baker, Nicholas (North Dorset)
Bruce-Gardyne, John
Crouch, David


Banks, Robert
Bryan, Sir Paul
Dean, Paul (North Somerset)


Beaumont-Dark, Anthony
Buchanan-Smith, Hon Alick
Dickens, Geoffrey


Bell, Ronald
Buck, Antony
Dodsworth, Geoffrey


Bendall, Vivian
Budgen, Nick
Dorrell, Stephen


Bennett, Sir Frederic (Torbay)
Bulmer, Esmond
Douglas-Hamilton, Lord James


Benyon, Thomas (Abingdon)
Burden, F. A.
Dover, Denshore


Benyon, W. (Buckingham)
Butcher, John
du Cann, Rt Hon Edward


Best, Keith
Butler, Hon Adam
Dunn, Robert (Dartford)


Bevan, David Gilroy
Cadbury, Jocelyn
Durant, Tony


Biffen, Rt Hon John
Carlisle, Kenneth (Lincoln)
Dykes, Hugh


Biggs-Davison, John
Carlisle, Rt Hon Mark (Runcorn)
Eden, Rt Hon Sir John


Blackburn, John
Chalker, Mrs. Lynda
Edwards, Rt Hon N. (Pembroke)


Body, Richard
Channon, Paul
Eggar, Timothy


Bonsor, Sir Nicholas
Chapman, Sydney
Elliott, Sir William


Boscawen, Hon Robert
Churchill, W.S.
Emery, Peter




Eyre, Reginald
Langford-Holt, Sir John
Renton, Tim


Fairbairn, Nicholas
Latham, Michael
Rhodes James, Robert


Fairgrieve, Russell
Lawrence, Ivan
Ridsdale, Julian


Faith, Mrs Sheila
Lawson, Nigel
Rifkind, Malcolm


Farr, John
Lee, John
Roberts, Michael (Cardiff NW)


Fell, Anthony
Lennox-Boyd, Hon Mark
Roberts, Wyn (Conway)


Fenner, Mrs Peggy
Lester, Jim (Beeston)
Rossi, Hugh


Finsberg, Geoffrey
Lewis, Kenneth (Rutland)
Rost, Peter


Fisher, Sir Nigel
Lloyd, Ian (Havant &amp; Waterloo)
Royle, Sir Anthony


Fletcher, Alexander (Edinburgh N)
Lloyd, Peter (Fareham)
Sainsbury, Hon Timothy


Fletcher-Cooke, Charles
Loveridge, John
St. John Stevas, Rt Hon Norman


Fookes, Miss Janet
Luce, Richard
Scott, Nicholas


Forman, Nigel
Lyell, Nicholas
Sha[...] Michael (Scarborough)


Fowler, Rt Hon Norman
McAdden, Sir Stephen
Shelton, William (Streatham)


Fox, Marcus
McCrindle, Robert
Shepherd, Colin (Hereford)


Fraser, Rt Hon H. (Stafford &amp; St)
Macfarlane, Neil
Shepherd, Richard (Aldridge-Br'hills)


Fraser, Peter (South Angus)
MacGregor, John
Shersby, Michael


Fry, Peter
Mackay, John (Argyll)
Silvester, Fred


Galbraith, Hon T. G. D.
Macmillan, Rt Hon M. (Farnham)
Sims, Roger


Gardiner, George (Reigate)
McNair-Wilson, Michael (Newbury)
Skeet, T. H. H.


Gardner, Edward (South Fylde)
McNair-Wilson, Patrick (New Forest)
Smith, Dudley (War. and Leam'ton)


Garel-Jones, Tristan
Madel, David
Speed, Keith


Glyn, Dr Alan
Major, John
Speller, Tony


Goodhart, Philip
Marland, Paul
Spence, John


Goodlad, Alastair
Marlow, Antony
Spicer, Michael (S Worcestershire)


Gorst, John
Marshall, Michael (Arundel)
Sproat, Iain


Gow, Ian
Marten, Neil (Banbury)
Squire, Robin


Gower, Sir Raymond
Mates, Michael
Stanbrook, Ivor


Grant, Anthony (Harrow C)
Mather, Carol
Stanley, John


Greenway, Harry
Maude, Rt Hon Angus
Steen, Anthony


Grieve, Percy
Mawby, Ray
Stevens, Martin


Griffiths, Eldon (Bury St Edmunds)
Mawhinney, Dr Brian
Stewart, Ian (Hitchin)


Griffiths, Peter (Portsmouth N)
Maxwell-Hyslop, Robin
Stewart, John (East Renfrewshire)


Grist, Ian
Mayhew, Patrick
Stokes, John


Grylls, Michael
Mellor, David
Stradling Thomas. J.



Meyer, Sir Anthony
Tapsell, Peter


Gummer, John Selwyn
Miller Hal (Bromsgrove &amp; Redditch)
Tebbit, Norman


Hamilton, Hon Archie (Eps'm&amp;Ew'll)
Mills, Iain (Meriden)
Temple-Morris, Peter


Hamilton, Michael (Salisbury)
Mills, Peter (West Devon)
Thatcher, Rt Hon Mrs Margaret


Hampson, Dr Keith
Miscampbell, Norman
Thomas, Rt Hon Peter (Hendon S)


Hannam, John
Mitchell, David (Basingstoke)
Thompson, Donald


Haselhurst, Alan
Moate, Roger
Thorne, Neil (Ilford South)


Havers, Rt Hon Sir Michael




Hawkins, Paul
Montgomery, Fergus
Thornton, George



Moore, John
Townend, John (Bridlington)


Hawksley, Warren
Morgan, Geraint
Townsend, Cyril D. (Bexleyheath)


Hayhoe, Barney
Morris, Michael (Northampton, Sth)
Trippier, David


Heath, Rt Hon Edward
Morrison, Hon Charles (Devizes)
Trotter, Neville


Heddle, John




Henderson, Barry
Morrison, Hon Peter (City of Chester)
van Straubenzee, W. R


Heseltine, Rt Hon Michael
Mudd, David
Vaughan, Dr Gerard


Hicks, Robert
Murphy, Christopher
Viggers, Peter


Higgins, Terence L.
Myles, David
Waddington, David


Higgins, Terence L.
Neale, Gerrard
Wakeham, John


Hill, James
Nelson, Anthony
Waldegrave, Hon William


Hogg, Hon Douglas (Grantham)
Neubert, Michael
Walker, Rt Hon Peter (Worcester)


Holland, Philip (Carlton)
Newton, Tony
Walker-Smith, Rt Hon Sir Derek


Hooson, Tom
Nott, Rt Hon John
Wall, Patrick


Hordern, Peter
Onslow, Cranley
Waller, Gary


Howe, Rt Hon Sir Geoffrey

Walters, Dennis


Howell, Rt Hon David (Guildford)
Oppenheim, Rt Hon Mrs Sally



Howell, Ralph (North Norfolk)
Osborn, John
Ward, John



Page, John (Harrow, West)
Warren, Kenneth


Hunt, David (Wirral)
Page, Rt Hon R. Graham (Crosby)
Watson, John


Hunt, John (Ravensbourne)
Parkinson, Cecil
Wells, John (Maidstone)


Hurd, Hon Douglas
Patten, Christopher (Bath)
Wells, P. Bowen (Hert'rd&amp;Stev'nage)


Irving, Charles (Cheltenham)
Patten, John (Oxford)
Wheeler, John


Jenkin, Rt Hon Patrick
Pattie, Geoffrey
Whitelaw, Rt Hon William


Jessel, Toby
Pawsey, James
Whitney, Raymond


Johnson Smith, Geoffrey
Percival, Sir Ian
Wickenden, Keith


Jopling, Rt Hon Michael
Peyton, Rt Hon John
Wiggin, Jerry


Joseph, Rt Hon Sir Keith
Pink, R. Bonner
Wilkinson, John


Kaberry, Sir Donald
Pollock, Alexander
Williams, Delwyn (Montgomery)


Kershaw, Anthony
Porter, George
Winterton, Nicholas


Kimball, Marcus
Price, David (Eastleigh)
Wolfson, Mark


King, Rt Hon Tom
Prior, Rt Hon James
Young, Sir George (Acton)


Kitson, Sir Timothy
Proctor, K. Harvey
Younger, Rt Hon George


Knight, Mrs Jill
Raison, Timothy



Knox, David
Rathbone, Tim
TELLERS FOR THE AYES:


Lamont, Norman
Rees, Peter (Dover and Deal)
Mr. Spencer Le Marchant and


Lang, Ian
Rees-Davies, W. R.
Mr. Anthony Berry.




NOES


Abse, Leo
Archer, Rt Hon Peter
Barnett, Guy (Greenwich)


Adams, Allen
Armstrong, Ernest
Barnett, Rt Hon Joel (Heywood)


Allaun, Frank
Ashton, Joe
Beith, A. J.


Alton, David
Atkinson, Norman (H'gey, Tott'ham)
Benn, Rt Hon Anthony Wedgwood


Anderson, Donald
Bagier, Gordon A. T.
Bennett, Andrew (Stockport N)







Bidwell, Sydney
Grant, John (Islington C)
O'Neill, Martin


Booth, Rt Hon Albert
Grimond, Rt Hon J.
Orme, Rt Hon Stanley


Boothroyd, Miss Betty
Hamilton, James (Bothwell)
Owen, Rt Hon Dr David


Bottomley, Rt Hon Arthur (M'brough)
Hamilton, W. W. (Central Fife)
Palmer, Arthur


Bradley, Tom
Hardy, Peter
Park, George


Bray, Dr Jeremy
Harrison, Rt Hon Walter
Parker, John


Brown, Hugh D. (Provan)
Hattersley, Rt Hon Roy
Parry, Robert


Brown, Robert C. (Newcastle W)
Haynes, David
Pendry, Tom


Brown, Ronald W. (Hackney S)
Healey, Rt Hon Denis
Penhaligon, David


Brown, Ron (Edinburgh, Leith)
Heffer, Eric S.
Powell, Raymond (Ogmore)


Buchan Norman
Hogg, Norman (E Dunbartonshire)
Prescott, John


Callaghan, Rt Hon J. (Cardiff SE)
Holland, Stuart (L'beth, Vauxhall)
Price, Christopher (Lewisham West)


Callaghan, Jim (Middleton &amp; P)
Home Robertson, John
Race, Reg


Campbell, Ian
Homewood, William
Radice, Giles


Campbell-Savours, Dale
Hooley, Frank
Rees, Rt Hon Merlyn (Leeds South)


Canavan, Dennis
Horam, John
Richardson, Miss Jo


Cant, R. B.
Howell, Rt Hon Denis (B'ham, Sm H)
Roberts, Albert (Normanton)


Carmichael, Neil
Howells, Geraint
Roberts, Ernest (Hackney North)


Carter-Jones, Lewis
Huckfield, Les
Roberts, Gwilym (Cannock)


Cartwright, John
Hughes, Mark (Durham)
Robertson, George


Clark, Dr David (South Shields)
Hughes, Robert (Aberdeen North)
Rodgers, Rt Hon William


Cocks, Rt Hon Michael (Bristol S)
Hughes, Roy (Newport)
Rooker, J. W.


Cohen Stanley
Janner, Hon Greville
Roper, John


Coleman, Donald
Jay, Rt Hon Douglas
Ross, Ernest (Dundee West)


Concannon, Rt Hon J. D.
John, Brynmor
Ross, Stephen (Isle of Wight)


Conlan Bernard
Johnson, James (Hull West)
Rowlands, Ted


Cook, Robin F.
Johnson, Walter (Derby South)
Ryman, John


Cowans, Harry
Jones, Alec (Rhondda)
Sandelson, Neville


Craigen, J. M. (Glasgow, Maryhill)
Jones, Barry (East Flint)
Sever, John


Crowther, J. S.
Jones, Dan (Burnley)
Sheerman, Barry


Cryer, Bob
Kaufman, Rt Hon Gerald
Sheldon, Rt Hon Robert (A ton-u-I.)


Cunliffe, Lawrence
Kerr, Russell
Shore, Rt Hon Peter (Step and Pop)


Cunningham George (Islington S)
Kilfedder, James A.
Silkin, Rt Hon John (Deptford)


Cunningham, Dr John (Whitehaven)
Kilroy-Silk, Robert
Silkin, Rt Hon S. C. (Dulwich)


Dalyell Tam
Kinnock, Neil
Silverman, Julius


Davidson, Arthur
Lambie, David
Skinner, Dennis


Davies, Rt Hon Denzil (Llanelli)
Lamborn, Harry
Smith, Rt Hon J. (North Lanarkshire)


Davies, E. Hudson (Caerphilly)
Lamond, James
Snape, Peter


Davies, Ifor (Gower)
Leadbitter, Ted
Soley, Clive


Davis, Clinton (Hackney Central)
Leighton, Ronald
Spearing, Nigel


Davis, Terry (B'rm'ham, Stechford)
Lewis, Arthur (Newham North West)
Spriggs, Leslie


Deakins, Eric
Lewis, Ron (Carlisle)
Stallard, A. W.


Dean, Joseph (Leeds West)
Lofthouse, Geoffrey
Stewart, Rt Hon Donald (W Isles)


Dempsey, James
Lyon, Alexander (York)
Stoddart, David


Dewar, Donald
Lyons, Edward (Bradford West)
Stott, Roger


Dixon, Donald
Mabon, Rt Hon Dr J. Dickson
Strang, Gavin


Dobson, Frank
McCartney, Hugh
Straw, Jack


Dormand, J. D.
McDonald, Dr Oonagh
Taylor, Mrs Ann (Bolton West)


Douglas-Mann, Bruce
McElhone, Frank
Thomas, Dafydd (Merioneth)


Dubs, Alfred
McGuire, Michael (Ince)
Thomas, Jeffrey (Abertillery)


Duffy, A.E. P.
McKay, Allen (Penistone)
Thomas, Mike (Newcastle East)


Dunn, James A. (Liverpool, Kirkdale)
McKelvey, William
Thorne, Stan (Preston South)


Dunnett, Jack
MacKenzie, Rt Hon Gregor
Tilley, John


Dunwoody, Mrs Gwyneth
Maclennan, Robert
Tinn, James


Eadie, Alex
McMahon, Andrew
Torney, Tom


Eastham, Ken
McMillan, Tom (Glasgow, Central)
Varley, Rt Hon Eric G.


Edwards, Robert (Wolv SE)
McNally, Thomas
Wainwright, Edwin (Dearne Valley)


Ellis, Raymond (NE Derbyshire)
McNamara, Kevin
Wainwrignt, Richard (Colne Valley)


Ellis, Tom (Wrexham)
McWilliam, John
Walker, Harold (Doncaster)


Ennals, Rt Hon David
Magee, Bryan
Watkins, David


Evans, Ioan (Aberdare)
Marks, Kenneth
Weetch, Ken


Evans, John (Newton)
Marshall, David (Gl'sgow, Shettles'n)
Wellbeloved, James


Ewing, Harry
Marshall, Dr Edmund (Goole)
Welsh, Michael


Faulds, Andrew
Marshall, Jim (Leicester South)
White, Frank R. (Bury &amp; Radcliffe)


Field, Frank
Martin, Michael (Gl'gow, Springb'rn)
White, James (Glasgow, Pollok)


Fitt, Gerard
Mason, Rt Hon Roy
Whitehead, Phillip


Fletcher, Ted (Darlington)
Maynard, Miss Joan
Whitlock, William


Foot, Rt Hon Michael
Meacher, Michael
Willey, Rt Hon Frederick




Williams, Rt Hon Alan (Swansea W)


Ford, Ben
Mellish, Rt Hon Robert
Williams, Sir Thomas (Warrington)


Forrester, John
Mikardo, Ian
Wilson, Gordon (Dundee East)


Foster, Derek
Millan, Rt Hon Bruce
Wilson, Rt Hon Sir Harold (Huyton)


Foulkes, George
Miller, Dr M. S. (East Kilbride)
Wilson, William (Coventry SE)


Fraser, John (Lambeth, Norwood)
Mitchell, Austin (Grimsby)
Winnick, David


Freeson, Rt Hon Reginald
Mitchell, R. C. (Soton, Itchen)
Woodall, Alec


Garrett, John (Norwich S)
Morris, Rt Hon Alfred (Wythenshawe)
Woolmer, Kenneth


Garrett, W. E. (Wallsend)
Morris, Rt Hon Charles (Openshaw)
Wrigglesworth, Ian


George, Bruce
Morris, Rt Hon John (Aberavon)
Wright, Miss Sheila


Gilbert, Rt Hon Dr John
Moyle, Rt Hon Roland
Young, David (Bolton East)


Ginsburg, David
Mulley, Rt Hon Frederick



Golding, John
Newens, Stanley
TELLERS FOR THE NOES:


Gourlay, Harry
Oakes, Gordon
Mr. Thomas Cox and


Graham, Ted
Ogden, Eric
Mr. George Morton.


Grant, George (Morpeth)
O'Halloran, Michael

Division No. 69]
AYES
[11.30 p.m.


Allaun, Frank
Ellis, Raymond (NE Derbyshire)
Martin, Michael (Gl'gow, Springb'rn)


Archer, Rt Hon Peter
Evans, John (Newton)
Maynard, Miss Joan


Ashton, Joe
Ewing, Harry
Millan, Rt Hon Bruce


Atkinson, Norman (H'gey, Tott'ham)
Fitt, Gerard
Morton, George


Barnett, Guy (Greenwich)
Fletcher, Ted (Darlington)
Newens, Stanley


Bennett, Andrew (Stockport N)
Foot, Rt Hon Michael
Oakes, Gordon


Booth, Rt Hon Albert
Foster, Derek
Ogden, Eric


Bray, Dr Jeremy
Foulkes, George
O'Neill, Martin


Brown, Hugh D. (Provan)
George, Bruce
Orme, Rt Hon Stanley


Brown, Ronald W. (Hackney S)
Golding, John
Parry, Robert


Brown, Ron (Edinburgh, Leith)
Graham, Ted
Powell, Raymond (Ogmore)


Buchan, Norman
Grant, George (Morpeth)
Prescott, John


Callaghan, Rt Hon J. (Cardiff SE)
Grant, John (Islington C)
Race, Reg


Callaghan, Jim (Middleton &amp; P)
Hamilton, W. W. (Central Fife)
Roberts, Albert (Normanton)


Campbell, Ian
Harrison, Rt Hon Walter
Roberts, Ernest (Hackney North)


Campbell-Savours, Dale
Haynes, David
Robertson, George


Canavan, Dennis
Hogg, Norman (E Dunbartonshire)
Rodgers, Rt Hon William


Carmichael, Neil
Holland, Stuart (L'beth, Vauxhall)
Rooker, J. W.


Cocks, Rt Hon Michael (Bristol S)
Home Robertson, John
Roper, John


Cohen, Stanley
Hooley, Frank
Ross, Ernest (Dundee West)


Concannon, Rt Hon J. D.
Howell, Rt Hon Denis (B'ham, Sm H)
Rowlands, Ted


Conlan, Bernard
Huckfield, Les
Silkin, Rt Hon John (Deptford)


Cook, Robin F.
Hughes, Robert (Aberdeen North)
Skinner, Dennis


Cowans, Harry
Jones, Alec (Rhondda)
Smith, Rt Hon J. (North Lanarkshire)


Cox, Tom (Wandsworth, Tooting)
Jones, Barry (East Flint)
Snape, Peter


Craigen, J. M. (Glasgow, Maryhill)
Kilroy-Silk, Robert
Soley, Clive


Cryer, Bob
Lambie, David
Spearing, Nigel


Cunliffe, Lawrence
Lamond, James
Stallard, A. W.


Dalyell, Tam
Lewis, Arthur (Newham North West)
Stott, Roger


Davis, Terry (B'rm'ham, Stechford)
Lofthouse, Geoffrey
Strang, Gavin


Dean, Joseph (Leeds West)
Lyons, Edward (Bradford West)
Straw, Jack


Dempsey, James
Mabon, Rt Hon Dr J. Dickson
Taylor, Mrs Ann (Bolton West)


Dewar, Donald
McDonald, Dr Oonagh
Tinn, James


Dixon, Donald
McElhone, Frank
Wainwright, Edwin (Dearne Valley)


Dobson, Frank
McKay, Allen (Penistone)
Welsh, Michael


Dormand, J. D.
McKelvey, William
White, James (Glasgow, Pollok)


Douglas-Mann, Bruce
Maclennan, Robert
Winnick, David


Dubs, Alfred
McMahon, Andrew
Woodall, Alec


Duffy, A. E. P.
McMillan, Tom (Glasgow, Central)
Young, David (Bolton East)


Dunn, James A. (Liverpool, Kirkdale)
Marks, Kenneth



Dunwoody, Mrs Gwyneth
Marshall, David (Gl'sgow, Shettles'n)
TELLERS FOR THE AYES:


Eadie, Alex
Marshall, Dr Edmund (Goole)
Mr. James Hamilton and


Eastham, Ken
Marshall, Jim (Leicester South)
Mr. Hugh McCartney.




NOES


Alexander, Richard
Colvin, Michael
Heath, Rt Hon Edward


Alison, Michael
Cope, John
Heddle, John


Ancram, Michael
Cranborne, Viscount
Henderson, Barry


Arnold, Tom
Crouch, David
Hicks, Robert


Aspinwall, Jack
Dodsworth, Geoffrey
Hogg, Hon Douglas (Grantham)


Atkins, Rt Hon H. (Spelthorne)
Douglas-Hamilton, Lord James
Hooson, Tom


Atkins, Robert (Preston North)
Dover, Denshore
Hordern, Peter


Atkinson, David (B'mouth, East)
Dunn, Robert (Dartford)
Howe, Rt Hon Sir Geoffrey


Baker, Nicholas (North Dorset)
Dykes, Hugh
Howells, Geraint


Beaumont-Dark, Anthony
Eden, Rt Hon Sir John
Hurd, Hon Douglas


Beith, A. J.
Emery, Peter
Jopling, Rt Hon Michael


Bennett, Sir Frederic (Torbay)
Fairbairn, Nicholas
Kilfedder, James A.


Berry, Hon Anthony
Fairgrieve, Russell
King, Rt Hon Tom


Best, Keith
Faith, Mrs Sheila
Kitson, Sir Timothy


Bevan, David Gilroy
Fenner, Mrs Peggy
Knight, Mrs Jill


Biggs-Davison, John
Fletcher, Alexander (Edinburgh N)
Knox, David


Blackburn, John
Fox, Marcus
Lang, Ian


Bonsor, Sir Nicholas
Fraser, Peter (South Angus)
Langford-Holt, Sir John


Boscawen, Hon Robert
Gardiner, George (Reigate)
Lawrence, Ivan


Boyson, Dr Rhodes
Garel-Jones, Tristan
Le Marchant, Spencer


Braine, Sir Bernard
Goodhart, Philip
Lennox-Boyd, Hon Mark


Bright, Graham
Gorst, John
Lester, Jim (Beeston)


Brinton, Timothy
Gow, Ian
Lloyd, Peter (Fareham)


Brooke, Hon Peter
Gower, Sir Raymond
Loveridge, John


Brown, Michael (Brigg &amp; Sc'thorpe)
Griffiths, Peter (Portsmouth N)
Luce, Richard


Bruce-Gardyne, John
Grist, Ian
Lyell, Nicholas


Butcher, John
Grylls, Michael
Macfarlane, Neil


Cadbury, Jocelyn
Hamilton, Hon Archie (Eps'm&amp;Ew'll)
Mackay, John (Argyll)


Carlisle, Kenneth (Lincoln)
Hampson, Dr Keith
McNair-Wilson, Michael (Newbury)


Carlisle, Rt Hon Mark (Runcorn)
Hannam, John
Major, John


Chapman, Sydney
Haselhurst, Alan
Marlow, Antony


Clark, Hon Alan (Plymouth, Sutton)
Hawkins, Paul
Mates, Michael


Clarke, Kenneth (Rushcliffe)
Hawksley, Warren
Maude, Rt Hon Angus







Maxwell-Hyslop, Robin
Rees-Davies, W. R.
Tebbit, Norman


Meyer, Sir Anthony
Renton, Tim
Temple-Morris, Peter


Miller, Hal (Bromsgrove &amp; Redditch)
Rhodes James, Robert
Thatcher, Rt Hon Mrs Margaret


Mills, Iain (Meriden)
Rifkind, Malcolm
Thompson, Donald


Moate, Roger
Roberts, Michael (Cardiff NW)
Thorne, Neil (Ilford South)


Montgomery, Fergus
Roberts, Wyn (Conway)
Thornton, George


Morris, Michael (Northampton, Sth)
Ross, Stephen (Isle of Wight)
Trippier, David


Morrison, Hon Peter (City of Chester)
Rost, Peter
Waddington, David


Murphy, Christopher
Sainsbury, Hon Timothy
Wakeham, John


Myles, David
St. John Stevas, Rt Hon Norman
Waldegrave, Hon William


Nelson, Anthony
Shelton, William (Streatham)
Waller, Gary


Neubert, Michael
Shepherd, Colin (Hereford)
Ward, John


Newton, Tony
Shepherd, Richard (Aldridge-Br'hills)
Watson, John


Onslow, Cranley
Silvester, Fred
Wells, P. Bowen (Hert'rd&amp;Stev'nage)


Osborn, John
Skeet, T. H. H.
Wheeler, John


Page, John (Harrow, West)
Speed, Keith
Wickenden, Keith


Page, Rt Hon R. Graham (Crosby)
Speller, Tony
Williams, Delwyn (Montgomery)


Parkinson, Cecil
Spence, John
Wolfson, Mark


Parris, Matthew
Sproat, Iain
Young, Sir George (Acton)


Patten, John (Oxford)
Squire, Robin
Younger, Rt Hon George


Penhaligon, David
Stanbrook, Ivor



Pollock, Alexander
Stevens, Martin
TELLERS FOR THE NOES:


Porter, George
Stewart, John (East Renfrewshire)
Mr. Carol Mather and


Proctor, K. Harvey
Stradling Thomas, J.
Mr. John MacGregor.


Rathbone, Tim

Question accordingly negatived.

SOUND BROADCASTING

Ordered,
That there shall be a Select Committee to give directions and perform other duties in accordance with the provisions of the Resolution of the House of 26th July 1977 in relation to Sound Broadcasting, and to make recommendations thereon to the House.

Ordered,
That the Committee do consist of Six Members.

Ordered,
That the Committee have power to send for persons, papers and records; to sit notwithstanding any Adjournment of the House; to adjourn from place to place; and to report from time to time.

Ordered,
That Two be the Quorum of the Committee.

Ordered,
That the Committee have power to report from time to time the Minutes of Evidence taken before them and any Memoranda submitted to them.

Ordered,
That the Committee have power to appoint persons with expert knowledge either to supply information which is not readily available or to elucidate matters of complexity relating to the matters referred to them.

Ordered,
That the Committee have power to join with any Select Committee on Sound Broadcasting that may be appointed by the Lords.

Ordered,
That these Orders be Standing Orders of the House until the end of this Parliament.—[Lord James Douglas-Hamilton.]

Message to the Lords to acquaint them with such of the said Orders as are necessary to be communicated to their Lordships.

SOUND BROADCASTING

Ordered,
That Mr. Alan Clark, Mr. Stephen Hastings, Mr. Robert Mellish, Mr. Geoffrey Johnson Smith and Mr. Nigel Spearing be Members of the Select Committee on Sound Broadcasting.

Ordered,
That the members of the Committee nominated this day shall continue to be members of the Committee for the remainder of this Parliament.

Ordered,
That this Order be a Standing Order of the House.—[Lord James Douglas-Hamilton.]

MEMBERS' INTERESTS

Ordered,
That there shall be a Select Committee to examine the arrangements made for the compilation, maintenance and accessibility of the Register of Members' Interests; to consider any proposals made by Members or others as to the form and contents of the Register; to consider any specific complaints made in relation to the registering or declaring of interests; to consider what classes of person (if any) other than Members ought to be required to register; and to make recommendations upon these and any other matters which are relevant.

Ordered,
That the Committee do consist of Thirteen Members:

Ordered,
That the Committee have power to send for persons, papers and records; to sit not withstanding any Adjournment of the House and to report from time to time.

Ordered,
That Five be the Quorum of the Committee.

Ordered,
That these Orders be Standing Orders of the House until the end of this Parliament.—[Lord James Douglas-Hamilton.]

MEMBERS' INTERESTS

Motion made,
That Mr. Robert Adley, Mr. Joe Ashton, Mr. Andrew Bennett, Mr. R. B. Cant, Mr. Geoffrey Dodsworth, Mr. Tony Durant, Sir Nigel Fisher, Mr. Percy Grieve, Mr. Geoffrey Johnson Smith, Mr. David Madel, Mr. Charles Morris, Mr. Arthur Palmer, and Mr. Frederick Willey, be members of the Select Committee on Members' Interests.—[Lord James Douglas-Hamilton.]

Hon. Members: Object.

NURSERY EDUCATION (CLWYD)

Motion made, and Question proposed, That this House do now adjourn.—[Lord James Douglas-Hamilton.]

Mr. Barry Jones: I forecast that next year Clwyd's rates will rise by 25 per cent. Nearly 20 per cent. will be due to the recent Tory Budget boost to inflation, and the rest will be a supplementary rate to try to rescue vital services such as education. This Government have cheated parents. They promised them tax cuts, but they can be obtained only by slashing central Government funding of county services such as education. Some observers believe that education standards will be butchered because of the Government's blind commitment to "Thatcherite" cuts in public spending.
Pernicious Government financial policy, imposed to redeem the tax cuts election pledge, have brought forth unprecedented demonstrations. Spontaneously, thousands of mothers gathered at Shire Hall this week. They carried the day, and persuaded the local education authority not to massacre the nursery units, not to imperil Welsh language teachers and teaching and not to penalise vulnerable pupils in need of remedial education. In fact, their muscle power far exceeded the legendary power of the trade unions.
But still the Clwyd LEA finds itself in an impossible position. As the county programme for 1980–81 says,

With regard to growth, it is evident that the Government is not prepared to maintain the levels set out in its predecessor's White Paper mentioned in paragraph 3. A cutback of 3 per cent. in current expenditure in the present year has already been called for, roughly equating to £2·5 million of the country's revenue budget. Clawback of rate support grant for 1979–80 is still to be announced. It is also evident that the Government will be proposing further cuts in the coming year, and there seems little prospect of any improvement in the situation for some time to come".
I cannot adequately describe the indignation and dismay depicted by the hundreds of young parents whom I have interviewed in the last few weeks. One thing is for certain—they believe in nursery education, oppose education cuts and dislike totally the Government's current policy.
The National Union of Teachers has left me in no doubt whatever regarding its views. It envisages over 300 teachers less, the primary pupil-teacher ratio going from 23·25 to 24·25, and a decline in the secondary pupil-teacher ratio from 17 to 18·5 It says that there will be a review of small sixth forms. That is what the NUT has told me, and I congratulate its members in Clwyd on forming an action committee to alert the local people against what will be an inevitable fall in standards. It is certainly their intention to warn against that possibility.
Mrs. Ann Snowden, of the Mold and Buckley NUT, has written to me deploring the advance towards cuts in education. She says that the first point to emphasise
is the combined effect of various proposals for cuts on the slow learners and deprived children … The second point is the worsening of the pupil-teacher ratio … which must result in whole subjects disappearing from the curriculum … We are hoping that the council will agree to a supplementary rate.
That is on behalf of the NUT.
Many members of school staffs throughout Clwyd have told me of their great concern. For our pupils some subjects will disappear from the curriculum. They will have restricted choice in the fourth, fifth, sixth and seventh years, which will affect their career opportunities. It will no longer be feasible to provide for minority subjects and those courses that are designed to broaden the perspective of pupils. Additional stress will be placed on teachers through the increased size of classes. Some subjects will be taught by non-specialists. New entrants to the profession will not have


the benefit of immediate support from senior colleagues. Supply teachers with the appropriate specialisation will not be available, thus disrupting courses. At lunch-time supervision is stretched to the limit and can be stretched no further.
Parents value and have come to expect the school to provide counselling and guidance for their children. The present level of caring cannot be sustained. All pupils in the comprehensive school will be affected by these cuts over the next months and years. Parents are rightly concerned that the opportunities for their children will be significantly restricted. We shall not be able to maintain the existing standards of work or the quality and range of opportunities offered. That is the thrust of intelligence and advice that I have received. I am told that the morale of the profession is seriously affected by the prospect of continuing cuts of such severity. Short- and long-term effects of these cuts on pupils' opportunities in an increasingly complex world is surely most worrying.
From Flint, Mr. Megson has written to me in blunt terms, saying that
The Government made it clear that their intention was to cut public spending but they had no mandate from the public to destroy an educational system which has in recent years provided wider and better opportunity for our young people.
The cuts
Simply a shortening of the duration of 'a school education' for many young people … As the Member of Parliament for Flint, East I hope you can help by passing on my fears and dejection through the channels at your disposal so that we may try to change the direction the present Government have elected to take.
I have also been told by the Clwyd Secondary Headmasters' Federation that it is deeply disturbed about the implications in Clwyd of educational cuts. It says that
These cuts are not just 'good housekeeping' adjustments and savings but the amputation of important parts of the education service … which were regarded as essential. The teachers who remain in the service are becoming increasingly demoralised.
The Clwyd Federation of PTAs has been in touch with me. It vigorously opposes any of the suggested cuts in education that affect the quality of tuition given to our children. I dare say that the Minister will say that cuts can be

found that will not affect the quality of tuition. My constituents and many others will be interested to hear his observations.
The honorary secretary of the St. Richard Gwyn Association of the high school in Flint has written to me saying that
As a Member of Parliament who has represented many of us living in the constituency with distinction we would ask for your active help in promoting educational safeguards at a very difficult time for the nation. The Association asks that those cuts which directly affect the quality of education in the classroom should not be imposed. Recently articulated Conservative theory on education has emphasised the need to safeguard educational standards. The Party has also taken a strong stand on the rights of parents. Current Government policies threaten both.
I agree.
A Mrs. Shackleton, who writes to me from Cefn-y-Bedd, in the part of my constituency near Wrexham, says:
I have two children at Abermorddn Primary School. The junior children at this school are in mobile classrooms. Due to not having a teacher replaced this September, these rooms are going to be overcrowded. The toilet facilities also are far from ideal too. The junior department of this school is in the building programme for 1980. It is essential that this is not delayed at all.
We know that it will be because the Budget has announced that the education budget must be cut by £55 million. The private sector will be stimulated by an additional £50 million. Mrs. Shackleton's school will not get what it needs because the order of priorities under this Government will be changed.
The headmaster of Queensferry primary school tells me that the principle of compensatory education is basic to the work of the school and that the proposed cuts attack that principle savagely. A constituent from Hope Village, a Mrs. G. A. Bellis, writes that
The facilities of the Swimming Baths were supposed to benefit the Community and as we—the parents—pay for them out of very heavy rates why should our children be denied free entry to these very facilities? I would add that I personally am not in the Teaching Profession, neither do I have a child under school age so have nothing personally to gain from these complaints other than the hopefully continued standard of Education our children enjoy at present.
A constituent from Broughton, a Mrs. Linda Roberts, says:
The opinion overall at our meeting was that no cuts in education should occur. Education should never suffer through inflation,


and the County Council should go to the ratepayers to raise these monies.
She speaks for many in Broughton.
The parent manager, a Mr Brian Williams, of the Broughton school, says in a letter to me:
This Country has been involved in two World Wars, with a considerable number of deaths, sufferings and hardships, in order that we may keep Britain alive and maintain standards our parents required for us. It is now apparent that because of the reduction in Grants from Central Government, that these standards are not going to be retained for our children.
I know that Mr. Williams has done a great deal for the school at Broughton, and that he and his managers are deeply distressed by what faces them.
From Saltney, a Mrs. Susan Stuart, whose friends I met in her home recently, when they were most distressed at hearing of the need for cuts in the education service, has written to me since that meeting. She says:
I am writing this letter on behalf of the majority of parents in the Saltney area, to request you to bring to the notice of the government the following drastic effects, in this area, of the recent 2 per cent cuts in spending in Education and to try to convey the bitterness of feeling these effects have caused.
I can vouch for the strong feelings of the mothers that I met in Saltney.
The parent-teachers association of the Ysgol-y-Fron and Perthy Terfyn schools in Halkyn Street, Holywell, sent me a letter stating that
We the P.T.A. Committee of the above Schools feel we must register our serious protest to you with regard to the cuts proposed in education spending by Clwyd County Council.
The association particularly points with dismay at the degree to which the actual schooling may be affected for the worse. It says that, as an alternative, there should be fewer subject supervisors and that an extension of the winter holiday should take place with a reduction in the summer holiday so as to lessen the cost of fuel in local schools.
A headmaster has written to me on behalf of his school in Bagillt, and as chairman of the PTA association, regarding the proposed cuts and the dire effect that they will have on the community of Bagillt. He says:
On educational and socio-economic grounds, I feel that there is a backward step, and I ask you, as a good friend of this area,

and as an ex-teacher, to do your utmost to oppose such action. Furthermore, I feel that you should be made aware of the fact that reports of 'no teacher redundancy' are inaccurate …
Surely education should mean more than ruthless culling of £X to meet demands of our political administration, who seem to have mixed up national priorities …
I could understand vicious cutbacks having to be made in social spending in times of national crisis, but as far as the public is concerned there is no crisis, but this is a deliberate action by a Government which will have far-reaching effects on social standards and morale for years to come.
Besides the headmaster's signature on that letter, there also appear the signatures of the PTA secretary, Mrs. Sutton, and the PTA assistant secretary, M. Sewell.
From Holywell, Mrs. Gwen Roberts says:
The present threatening cuts in our children's education will undoubtedly be very detrimental to many, especially to the children themselves and to certain areas in education that have been fostering so well over the years.
Mrs. Dougherty, of Buckley, at whose home I met a number of constituents who were concerned about these cuts, says:
It has been brought to my attention … that the present Conservative Government plan to make cuts in education. There is much speculation as to just where these cuts will come … I am certain about one thing, and that is to ensure my children's education standards improve, not deteriorate. I will give my full support to any campaign to see that this Government do not bring about this action. If these actions are allowed to materialise this year, it will be a springboard for future plans.
Finally, to sum up, it is a fact that throughout Wales we suffer a £1·3 million cut in the building programme. The hopes of modernising more of our ancient schools have been dashed, directly because of the Conservatives' Budget cuts in the State education service. There is a threat to reading and writing practice in the infant schools, a threat to books and equipment in our junior schools, and a threat to examination and preparation and prospects in secondary schools. There is also the prospect of disturbing redundancies amongst teachers.
If the cuts to be imposed by central Government go ahead, by the rate support grant cut, which inevitably points the axe at education, there will be a rapid deterioration affecting the most precious asset of the nation—our children. It is no use the Minister's saying that the Government are not to blame. The savage cuts in the RSG give Clwyd


LEA no option but to look very harshly at the education budget.

11.58 p.m.

Sir Anthony Meyer: I fully support the hon. Member for Flint, East (Mr. Jones) in his plea that education standards should not be reduced because of the necessity for cuts in expenditure, but, unlike the hon. Member, I fully support the need for such cuts. Furthermore, I have found, in meetings that I have had with parents and teachers throughout the county, that there is very general acceptance of the need for cuts, coupled with a determination that these cuts should be imposed in such a way as not genuinely to damage educational standards.
One common factor that I found running throughout was an absolute insistence that in no circumstances must the rates be allowed to rise on this account. But I found plenty of constructive suggestions about the way in which cuts could be made without damaging education standards. The most common one, with which I can hardly expect the hon. Gentleman to sympathise, is that there should be a massive reduction in the number of administrative staff in the education service, which has swollen beyond acceptable bounds. I recognise that there may be difficulties with the unions. I trust that the Government will encourage local authorities to be firm in their determination to cut the size of administrative staffs.
A second item on which there could be large economies is the subsidy to school meals. I find a general readiness to accept a higher charge for school meals. Unfortunately, as the law stands this seems outside the capacity of local education authorities. I hope that the Government will look urgently at the matter and that they will also examine the possibility—even more relevant—of a charge for attendance at nursery classes. At present this is excluded by law. I find that many parents would be prepared to pay a charge in exchange for an assurance that nursery classes would be allowed to continue.
A major contribution to reducing education costs that ultimately should be made is the question of the school leaving age, which has not been an unqualified success at its present level.

The Under Secretary of State for Wales (Mr. Michael Roberts): The hon. Member for Flint, East (Mr. Jones) was to raise the effect of Government spending cuts on nursery education in Clwyd. I took careful note of how much time he spent on that subject. He devoted not more than a second to it. One can understand why. The hon. Gentleman has been overtaken by events.
I welcome the opportunity afforded by this debate to set on record the view that I take on the approach of local education authorities to reductions in expenditure now being sought by the Government. I can only believe that the dismayed and angry ladies of East Flint took no notice of their Member of Parliament but took notice of my advice, given from this Dispatch Box last Monday, when I suggested that it was for the local education authorities to decide whether cuts should be made. No doubt, having read my remarks, they went along to their local authority, made their demonstration and put their point of view. The result was that the local authority came to a totally different decision from that represented to us in the House by the Opposition during Welsh questions on Monday.
I must express a measure of sympathy for the hon. Member for Flint, East. Having said that he would be raising on the Adjournment the proposals to cut back sharply on nursery education in Clwyd, it must have been disconcerting—I put it no higher—to find that the education committee of Clwyd county council has, after all, decided not to proceed with the widely publicised recommendation put to it. I leave it to the hon. Gentleman to draw what lesson he wants from that.
Until comparatively recently, the hon. Gentleman was himself the Under-Secretary of State at the Welsh Office who was responsible for education. He shares with me both a personal knowledge of and a commitment to the education service. His experience in office will have given him an acute awareness not only of the scope of nursery education but of the vulnerability of this sector in relation to compulsory school age education. He will also recognise the problem of resources and, in consequence, the overriding importance of priorities in a situation such as the present one.
In some respects, therefore, we have much in common. Neither of us is in any doubt about the inherent importance and value of nursery education. In an ideal world, we would both want to see this form of education provided for all those children aged between three and five whose parents want it. It remains our long-term objective to achieve the targets of nursery provision laid down in the Gittins report and in the 1973 circular issued, it will be recalled, by a Conservative Government.
But in an ideal world we should also have a right to expect many other things—more new schools to replace the hopelessly dilapidated ones that we both know about, better equipment and certainly better books, and improvements all round in the quality of our public services.
We must, however, recognise that we live in the real world, not in an ideal world, and it is no use pretending that we have arrived at Utopia. This Government certainly did not inherit Utopia from the Opposition when we took over in May this year, and the hon. Member for Flint, East must know that in education affairs if he knows anything about the matter at all.
I wish now to say a few words about standards because the hon. Gentleman is concerned about them, as are all those of his constituents who wrote to him and whose words he has quoted tonight. They are concerned with standards. But I do not for a moment subscribe to the proposition that standards depend entirely on the volume of resources put into any service. I may in passing remind the hon. Gentleman of the considerable achievements of the education service in Wales at a time when the resources available were but a small fraction of today's level. Indeed, there are many who would take the view that standards in the basic educational skills have failed to keep pace either with the injection of resources or with the demands of society. In my view, the standards achieved in education depend largely on how well we use the resources at our command.
If the hon. Gentleman has any doubts about that, he might recall what was said in the Green Paper of 1977, "Education in Schools", to the effect that

although some improvements call for additional resources, others, including many of those proposed in this Paper, do not.
This is partly a question of attitudes and basic approach. I make no apology for saying that it is time that we restored the emphasis on the basic curriculum. For far too long this has been regarded as an old-fashioned concept, and great has been the obsession in recent years with the structure of the education service—with the organisation, reorganisation and, frequently, the disorganisation of schools. We have for too long ignored what goes on inside the classroom. This obsession with structure reached its peak in the Education Act 1976, which is now, happily, well on the way to repeal.
It would be churlish of me not to recognise that in the last year or so of their period of office the Labour Government belatedly realised that all was not well with the quality of education, and I readily acknowledge the initiative of the hon. Member for Flint, East in seeking to tackle some of the serious problems which we have faced in Wales in regard to examination achievement, standards of literacy and numeracy, truancy and so on.
But a death-bed conversion is no substitute for a basic lifelong commitment to maintaining and raising education standards. That commitment is right at the heart of this Government's education policies. I hope that the hon. Gentleman will not run away into irresponsible opposition, claiming that only by the injection of resources can standards be improved. If he does, he will betray the only constructive episode of his ministerial career.
In conclusion, I would say that whilst I appreciate the concern expressed by the hon. Gentleman, I cannot agree with his approach to the matter. These are difficult times. Difficult and painful decisions have to be taken by central and local government alike if this country is to set itself on to a new course.
We as a Government have established our strategic national priorities. We have sufficient confidence in the integrity and the sensitivity of local authorities to leave them to make the essential decisions on priorities in their own fields. Here lies the contrast between Government and Opposition. The Opposition know that they had to make cuts, and we have to make cuts, but now that cuts have to be made they argue in Opposition that the


Government should say to each authority exactly what it should do. That is why they are running here on every occasion demanding debates on the mere sight of a headline saying "52 schools to be closed". That is why we went through all the trauma of last Monday, and all the exciting headlines which were to be garnered from the Welsh press, only to find that the local education authority of Clwyd made a totally different decision.
I hope that the hon. Gentleman exercises in future a little caution before he rushes in where angels would fear to tread.

The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at eleven minutes past Twelve o'clock.